Oaths and Affirmations

Baroness Ashton of Upholland took the oath, and signed an undertaking to abide by the Code of Conduct.

Death of a Member: Lord Bell
 - Announcement

Lord Fowler: My Lords, I regret to inform the House of the death of the noble Lord, Lord Bell, on 25 August. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.

Retirements of Members
 - Announcement

Lord Fowler: My Lords, I should like to notify the House of the retirements, with effect from 26 July, of the noble Lord, Lord MacGregor of Pulham Market, and with effect from 2 September, of the noble Lord, Lord Palumbo, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I should like to thank the noble Lords for their very much-valued service to the House.

Sterling
 - Question

Lord Haskel: To ask Her Majesty's Government what action they plan to take to boost investment and productivity and to stop any decline in the value of sterling.

Earl of Courtown: My Lords, we have worked hard to build a stronger, fairer economy, dealing with the deficit, helping people into work and cutting taxes for individuals, families and businesses. We have created the £37 billion national productivity investment fund and have provided £600 billion in capital investment, including in infrastructure and skills. On sterling, it is important to note that the UK does not have an exchange rate target. The price of sterling is set by the market.

Lord Haskel: Minister, how can we believe your words about growing the economy when last week the Bank of England told us that the Government’s   recent actions—yes, actions not words—had reduced the level of UK productivity by 2% to 5% and caused many British companies to significantly cut investments plans? With the decline in the value of sterling, there has been a sharp drop in factory output. What will the Government do to put this right?

Earl of Courtown: My Lords, the noble Lord mentioned a number of issues, one of which was factory output. I remind him that manufacturing now accounts for almost half of total UK exports—49% in 2017, with a value of just over £300 million. The manufacturing sector has seen productivity increase over three times faster than the UK economy as a whole over the past 10 years. I cannot add anything more relating to sterling but I reiterate that we have provided over half a trillion pounds in capital investment. We are cutting taxes to support business investment, we have improved access to finance through the British Business Bank, and we have improved skills through investment in apprenticeships and the introduction of T-levels.

Lord Fox: My Lords, here is another statistic: the ONS says that productivity fell 0.6% between April and June. Over the summer Andy Haldane, who is not only the chief economist of the Bank of England but the chair of the Government’s Industrial Strategy Council, gave an important speech on the UK’s productivity problem. Its subtitle was “Hub No Spokes”. If the Minister had been here I would have asked him if he had read the speech; perhaps his stand-in can pass that question on. More importantly, having read that speech, what are the Government going to do to redress the balance and respond to the important points that Haldane makes?

Earl of Courtown: No, my Lords, I have not read Mr Haldane’s speech, but I will pass it on to my colleagues in the department. However, there is something that the noble Lord should acknowledge regarding the ONS statistics on productivity: he will be aware that the Bean review reported in March 2016, that the Government supported its recommendations, and that the ONS has so far made good progress in acting on them, to ensure that we have proper productivity figures available for our examination.

Lord Howell of Guildford: My Lords, does my noble friend agree that in the digital age and in a predominantly service economy, as the UK is, it is increasingly hard to measure accurately the notion of productivity? Does he therefore agree that all these discussions and comments need to be treated with great caution and balance?

Earl of Courtown: My noble friend is quite right, as always. He mentioned the digital age that we are in, and of course noble Lords will remember that we have the £400 million digital infrastructure fund, which is unlocking £1 billion for full-fibre broadband to connect more homes so that they can act upon this digital age.

Lord Davies of Oldham: My Lords, does the noble Earl appreciate that his answer to my noble friend clashes with reality? With the pound at a low level you would expect our manufacturers and exporters to be making considerable progress, but informed opinion—as opposed to that from the Government Front Bench—in the manufacturing industry says that investment in that industry is at its lowest level since the slump and great crisis of 2008. How do his previous answers square with the brutal facts?

Earl of Courtown: My Lords, the noble Lord will be perfectly well aware that our economy has changed over the years. As I said earlier, the manufacturing sector has seen productivity increase by over three times faster than the UK economy as a whole over the past 10 years. As noble Lords will be aware, what is becoming more and more important is the service economy, our advances in the digital age and the technology that we are producing. That is what is really important and it is how the economy will grow further.

Lord Leigh of Hurley: My Lords, does the Minister agree that productivity, as measured by output per hour, is largely inappropriate for huge chunks of the British economy, particularly services? More importantly, productivity is affected by employment. In a period of full employment, productivity is bound to go down as the least productive people are employed. That has happened because this Government have a higher rate of employment, whereas Labour Governments have always left office with a higher rate of unemployment than when they came into power.

Earl of Courtown: My Lords, my noble friend makes a good point. He talked about the link between productivity and employment, which throws up different statistics. That is why it is so important that the review of the ONS comes forward with a more accurate way to measure productivity.

Lord Tomlinson: Can the Minister, or his department, justify the statement he has made twice that manufacturing productivity is rising three times faster than in the economy as a whole? Can he place a copy of the calculations on which that statement is based in the Library, so that we can all see whether it is fact or fiction?

Earl of Courtown: My Lords, I do not believe in uttering fiction from the Dispatch Box. I do not accept the noble Lord’s comment, but I will take it back to the department and ask for clarification on that figure.

Lord Flight: My Lords, are the Government aware of the extent to which increased regulation is causing a fall in productivity, particularly in the financial services sector? The numbers of people working in regulation are not producing anything positive and the effect is estimated to be as much as 10% over the  last decade.

Earl of Courtown: My Lords, my noble friend makes some interesting points. He will be fully aware of how the labour market is responding to the policies of Her Majesty’s Government, with 3.8 million more in work, youth unemployment falling by 46% and over 1 million fewer workless households since 2010.

Lord Bilimoria: My Lords, will the Minister acknowledge that, although there has been a productivity challenge in this country, the top 10% of our companies are world class, with world-class productivity? The challenge is to invest more in education, R&D and innovation. What is the progress in the industrial strategy towards increasing R&D and innovation expenditure from around 1% of GDP to 2.8%, as in the United States and Germany, let alone Israel’s rate of 4%?

Earl of Courtown: As noble Lords are aware, the whole point of the industrial strategy is to boost productivity and the earning power of people throughout the UK, as well as encouraging investment in the technologies of the future. The centrepiece of our approach is increased public investment in infrastructure and R&D through the national productivity investment fund. We have increased its total size to £37 billion, but the noble Lord makes a good point.

Lord Soley: Can the Minister confirm that he understands that the current Brexit crisis is having, and will continue to have, a profound effect on investment in this country? This will not end quickly, deal or no deal, because the problem continues. That is what we need to address if we are to take investment seriously in the future.

Earl of Courtown: My Lords, the noble Lord makes an important point as we move towards 31 October. We recognise that there has been some exchange rate volatility. This is not unusual as we move to our new relationship with the EU. It is important to remember that the UK’s macroeconomic framework is based on an inflation target, not an exchange rate target. It is for the independent Monetary Policy Committee to set monetary policy to meet that target.

Prosecutions and Sentencing
 - Question

Baroness Neville-Rolfe: To ask Her Majesty's Government what steps they plan to take to support the Crown Prosecution Service in prosecuting, and the courts in sentencing, those involved in gang-related offences, illegal migration and petty offences.

Lord Keen of Elie: My Lords, in 2018, the Government published a serious violence strategy to take action to address serious violence. Our strategy places a new emphasis on early intervention and sets out a multiagency approach.  The CPS is developing new guidance about gang culture and gang offending, which will summarise the relevant principles in case law to be applied when making charging decisions in any gang-related offence.

Baroness Neville-Rolfe: My Lords, over the summer, I was very pleased to hear of the Home Secretary’s new approach and of the extra funding for 20,000 police officers. Indeed, that takes me back to the time when my noble friend Lord Howard of Lympne, an esteemed predecessor, took a number of determined steps and succeeded in getting crime down across the board. Does my noble and learned friend agree that the vital way to support the police, who need to be helped, is to ensure that criminals receive appropriate sentences from the courts, that they serve those sentences, and that new, secure prisons are built, so that the problems we have in these various areas are tackled?

Lord Keen of Elie: My Lords, clearly, sentencing decisions are a matter for the independent judiciary, which is of course under a duty to follow any relevant guidelines produced by the independent Sentencing Council. The council produces guidelines specific to particular offences or groups of offences. I entirely acknowledge the points my noble friend Lady Neville-Rolfe makes about the need to complement the increase in policing by ensuring that we have adequate provision in the judiciary and the prison establishment.

Lord Morris of Aberavon: My Lords, is there not a wider question about the crisis generally in the practice of criminal law, from whom many in the CPS are recruited, because of continuing underpayment for work done? Now that austerity is said to be over, will the Government advocate for more resources to prosecutors and defenders?

Lord Keen of Elie: My Lords, we are of course concerned to ensure that the criminal justice system is adequately funded. We do not consider that we are in the midst of a crisis so far as that is concerned. Indeed, we engage with both the CPS and counsel and solicitors engaged in criminal defence work to ensure that they are properly resourced.

Lord Marks of Henley-on-Thames: My Lords, given the Prime Minister’s recent pronouncements on tackling crime more generally, are the Government abandoning previous policy on rehabilitation—of using prison less rather than more, reducing short sentences and increasing release on licence and home detention curfews? Are we moving towards a policy of harsher sentences based on the frankly false notion that prison works and, if so, on what evidence, particularly given the more liberal, evidenced-based policies on imprisonment and rehabilitation pursued by David Gauke, David Lidington and even Michael Gove as Justice Secretaries, and Rory Stewart and the present Justice Secretary as Prisons Ministers?

Lord Keen of Elie: My Lords, the Government recognise that prison alone is not the answer to crime. Prison must go hand in hand with rehabilitation and our policies are always pointed in that direction.

Baroness Chakrabarti: My Lords, I am grateful to the Minister for his answer. Does he agree that it is time to invest more in the justice system as a whole? Might he also agree that when Governments seek to encourage respect for the law in the country, they should begin by respecting the law themselves?

Lord Keen of Elie: My Lords, this Government do respect the law. In addition, this Government understand the law and the distinctions that lie between matters of politics and matters of law. In some areas that is not properly understood. Of course, there is always room for further investment in the justice system, but the Government face an issue of priorities. The question of further investment must be balanced by other demands on government.

Bishop of St Albans: My Lords, I share with many others gratitude for what the Government are doing to have an integrated approach to serious violence and youth violence in particular, and I welcome having more police because we need to have safer streets. But by the time we get to prosecuting and sentencing it is all too late. Very often people have been left injured and dead. How much are we investing way before that, particularly at school level? Will the noble and learned Lord say a little more about what support is being given to our schools? In particular, when, for example, children are found with knives, does this trigger a safeguarding response so that we are trying to deal with the causes, rather than just the results?

Lord Keen of Elie: My Lords, the right reverend Prelate makes a very good point. In July this year the Government announced their intention to bring forward legislation when parliamentary time allows for a new legal duty on public bodies to prevent and tackle serious violence—essentially what is referred to as a public health duty—that will cover the police, local councils, local health bodies, education, and youth offending services. Clearly, intervention at an early stage is the preferred approach.

Lord Watts: My Lords, is the increase in crime due to the Government cutting the number of police officers on our streets and massively cutting local government services that looked after young people? Do we not have to reverse those cuts, and should not the Government apologise for them?

Lord Keen of Elie: My Lords, the variation in crime has no single or simple explanation. It is a complex issue, based on social and attitude factors, education and intervention. It is not possible to single out one matter that would reduce or increase crime.

Queen’s Speech
 - Question

Lord Foulkes of Cumnock: To ask Her Majesty’s Government when they expect to announce a date for the next Queen’s Speech.

Earl Howe: My Lords, the Government have announced that the next Queen’s Speech will be on 14 October.

Lord Foulkes of Cumnock: It was a prescient Question, was it not?
Will the noble Earl, who is known for his integrity and honesty, confirm that Parliament normally goes into recess for party conferences, so that committees can sit and Questions can be tabled, and that Prorogation is normally prior to a Queen’s Speech and usually less than a week? So a Prorogation of five weeks, with no opportunity for parliamentary scrutiny of the Executive, is both unprecedented and unconstitutional.

Earl Howe: My Lords, I am a little surprised by the position taken by the noble Lord, in view of his previous call for a new Session. He was quite insistent on that point earlier in the year. However, it is impossible for me to be unaware that there are differences of view on these matters, and I have no desire to raise the temperature of the water in any way. However, the number of sitting days lost as a result of the Prorogation is only a handful. The important question surely is whether Parliament will have sufficient time after 14 October to express its view on a revised Brexit deal, if we achieve one, or on the preparations for no deal if we do not—and the Government are absolutely clear that sufficient time is available.

Baroness Smith of Basildon: I think the noble Earl will recognise that that view is not widely shared.
Before I respond, perhaps I may pay tribute to the noble Lord, Lord Young of Cookham, for his work. We will miss his dignity, wit and humour at the Dispatch Box.

Noble Lords: Hear, hear.

Baroness Smith of Basildon: My Lords, we all understand that any Prime Minister, particularly one who has been selected by less than 1% of the population during a crisis, would want a new Queen’s Speech to set out the objectives and the tone of his Government. But if this shutdown—which, as the noble Lord, Lord Foulkes said, is what it is—starts next Monday, it will last for five long weeks. Five days would have been better. So we have a Secretary of State who will not confirm that he will obey the law, and a Prime Minister whose first Question Time will be his only one in three months. We hear that MPs—even Cabinet Ministers—face being sacked if they do not agree with the Prime Minister. Why is this Prime Minister so frightened of scrutiny?

Earl Howe: My Lords, he is not. Let me be clear. My right honourable friend the Prime Minister believes strongly that Parliament must have time to consider further the UK’s withdrawal from the European Union, and to hold the Government to account. Parliament will return in good time before the European Council, and it will be sitting for two and a half weeks before exit day, which will allow ample time for debate in both Houses.

Lord Newby: My Lords, I join the noble Baroness in paying tribute to the dedication, skill and good humour of the noble Lord, Lord Young of Cookham, and to his support for the traditions of parliamentary democracy.

Noble Lords: Hear, hear.

Lord Newby: Does not the Minister, like me, find it extraordinary that none of his Front-Bench colleagues, many if not most of whom shared the view of the noble Lord, Lord Young, has shown the same degree of principle?

Earl Howe: My Lords, my noble friend Lord Young, to whom I too pay tribute for his exemplary service to this House and to the Government, has made clear that he has special personal reasons for taking the action that he has taken, and that he would not expect any of his colleagues to follow his example. I do not believe that I am misrepresenting him.

Baroness Hayman: My Lords, the noble Earl said that we were losing only a few sitting days. From that, should I conclude that the scheduled sitting days next week will actually take place? May I also ask him to reflect on the fact that sitting days are, as the noble Lord, Lord Foulkes, said, not the same as days on which Parliament is in session, when committees can sit and Parliament can be recalled? I am sure that I am not alone in remembering occasions when Parliament has sat during party conference season.

Earl Howe: My Lords, if the noble Baroness will allow, I think it is appropriate for me to leave it to my noble friend the Chief Whip to answer questions on the order of business this week and next. He will be making a business Statement immediately after Questions and it is right that we turn our attention to those matters at that point.

Lord Tyler: My Lords, the noble Earl implied that a recess is comparable to Prorogation. Will he now acknowledge that this is an absurd pretence from No. 10, because it is not the same thing? For example, the length of a recess can be quite different in the two Houses. Your Lordships’ House can sit and continue its work even if the Commons is in recess; that is not the case with Prorogation. Please will he now acknowledge that the ignorance and disdain of the current occupants of No. 10, as far as parliamentary matters are concerned, is a matter of really serious concern to your Lordships’ House?

Earl Howe: Let me apologise to the House—I did not mean to imply that there was an equivalence between a recess and a Prorogation. The noble Lord is absolutely right that they are two distinct things. The technical position is that once Parliament has been prorogued, it cannot be recalled. A recall of Parliament can happen only when Parliament is in Recess or adjourned—so to that extent the noble Lord makes a very good point. My point was slightly different, as I hope he will appreciate.

Lord Hunt of Kings Heath: My Lords, does the noble Earl accept that the unwritten constitution that we have depends on Prime Ministers actually doing the right thing? Given the current Prime Minister, has the time not come for us to have a written constitution?

Earl Howe: The answer to that question is not in my brief—but no doubt the noble Lord, with his ingenuity, can produce some very interesting proposals in that direction.

Baroness Deech: The Minister will have noticed that the House is united in wanting plenty of time to discuss the momentous events that lie ahead of us. Does he therefore not agree that any attempt to rip up the normal rules of procedure and rush through important legislation in a matter of hours, without permitting people to say what they should and allowing this House to give such a Bill the proper scrutiny for which the House is famous, would be unacceptable?

Earl Howe: I entirely agree with the noble Baroness.

Prorogation Recall
 - Question

Lord Cormack: To ask Her Majesty’s Government what assessment they have made of the powers available to recall Parliament during a prorogation in the event of a national or international crisis.

Earl Howe: My Lords, once Parliament has been prorogued it cannot be recalled. However, the sovereign, acting on the advice of Ministers, may issue a new proclamation setting an earlier date for the beginning of the new Session.

Lord Cormack: I thank my noble friend for that Answer and welcome the tone of his replies to the previous Question. I also add my tribute to my noble friend Lord Young of Cookham. Speaking from these Back Benches, I can say that he was universally liked and admired; his calm unflappability set an example to us all. I share my noble friend Lord Howe’s desire to lower the temperature and to obviate the need for rushed legislation. But if each House of Parliament were to pass a resolution requesting a rearrangement of the Prorogation and its dates, would not the Government be well advised to take that advice?

Earl Howe: My Lords, I repeat my tribute to my noble friend Lord Young, alongside my noble friend Lord Cormack. We shall miss him on the Front Bench. Clearly, if both Houses of Parliament were to take a view on any particular matter and address that proposal to the Prime Minister, it would be quite wrong for the Government to ignore such a request. I am sure that any such decision, if reached, would receive close attention from my right honourable friend.

Lord Wallace of Saltaire: Does the Minister agree with the following statement in the Commons Library briefing:
“Long prorogations … can give rise to fundamental questions about whether the Government of the day still commands the confidence of the House of Commons and therefore whether it can legitimately continue to govern”?
Has he had access to the paper on the impact of a no-deal Brexit which the Daily Mail tells us the Government have now decided not to publish and which says that we are heading towards an entirely foreseeable, major national crisis in our economy and society within the next eight weeks if we crash out with a no-deal Brexit? Would he regard that as the sort of depth of crisis which required Parliament to be recalled?

Earl Howe: My Lords, I have not had access to that paper. My noble friend Lord Callanan will give an update on Brexit preparations and take questions on those matters this afternoon, so I suggest that the noble Lord puts his question to my noble friend.

Baroness Hayter of Kentish Town: The noble Earl said earlier that we would come back for a Queen’s Speech on 14 October, which would give sufficient days to discuss this important issue. However, No.10 was yesterday briefing that, should the elected House of Commons have the audacity to take over business in the other place and put through a Bill, an election would be called—unusually—on a Monday, 14 October. That would probably mean that we would not sit for about a week after that. Does the noble Earl think that that would be sufficient time to discuss Brexit and all its implications?

Earl Howe: I do not want to sound glib but let us see what happens. There are strong reasons for the parties in the other place which are very exercised on these matters to show restraint. I think that the Prime Minister would say that he would be the last person to want a general election.

Noble Lords: Oh!

Earl Howe: He believes strongly that the focus must now be on obtaining an acceptable deal from the EU Commission and being given time to do that. He is clear that there is a strong chance that he will be successful.

Viscount Hailsham: My Lords, there are at least four members of the Cabinet who during the leadership election protested strongly against Prorogation in the present circumstances, and there are many members of the Cabinet who are calling for the deselection of Conservative Members of Parliament for voting against the Government when they themselves have done that on many occasions in many months. If this were the conduct of Labour Ministers under Mr Corbyn, how would my noble friend the Minister characterise such conduct? Would he use the words “hypocrisy”, “double standards”, “outrageous” and “deplorable”? If not, why not?

Earl Howe: It is very easy in a situation such as this for us to resort to colourful words to describe it. I personally regret the degree of emotion that has entered this debate. It is perhaps not surprising, but feelings run high—my noble friend is entirely right. I do not wish to add any animus to that situation.

Baroness Smith of Newnham: My Lords, it has been suggested that it would be unfortunate to try to push legislation through Parliament inappropriately quickly, but if the Prime Minister is looking for a deal which would not come until on or after 17 October, would we not need to amend the 2018 withdrawal Act? Is there time for that? Does the Minister envisage an opportunity for Parliament to amend that legislation appropriately?

Earl Howe: The technical position would be that, if a deal is reached, a withdrawal agreement Bill would be introduced, hopefully for approval by Parliament. We are absolutely clear that there is time to do that. There may be a need to obtain the consent of Parliament to sit at rather unusual hours to do that, but we are clear that it can be done.

Lord Lansley: My noble friend will recall that the 30 days referred to in the press conference at which the Prime Minister spoke with Chancellor Merkel expire on 21 September. Can he explain by what means this House and the other House might look at any proposals brought forward by the British Government and comment on them?

Earl Howe: My noble friend makes the point that during Prorogation it is impossible to do that. The point I was making earlier was that, once Parliament reconvenes, there is in fact ample time for it to consider any proposals that may be on the table.

Hong Kong
 - Private Notice Question

Baroness Northover: Asked by Baroness Northover
To ask Her Majesty’s Government what is their response to the ongoing situation in Hong Kong.

Baroness Northover: My Lords, I beg leave to ask a Question of which I have given private notice.

Lord Ahmad of Wimbledon: My Lords, we are deeply concerned about the serious situation in Hong Kong. My right honourable friend the Prime Minister discussed developments with other leaders at the G7 summit, and my right honourable friend the Foreign Secretary has recently spoken to Chinese Foreign Minister Wang Yi and Chief Executive Carrie Lam. We condemn violence but support the right to peaceful and lawful protest. Meaningful political dialogue taken forward by Hong Kong under its high degree of autonomy is the best way to resolve the current impasse.

Baroness Northover: My Lords, I thank the noble Lord for that statement. Does he note that the crisis is fast escalating, that the police appear to be acting with impunity and that Carrie Lam apparently feels that she has no autonomy? The Government have been very silent, certainly in public, on Hong Kong recently; they may be distracted, but what action are they taking, especially as we will shortly be coming up to the 70th anniversary of the foundation of the establishment of the People’s Republic of China? What is the Government’s view of proposals for a second UK or Commonwealth citizenship for Hong Kong citizens?

Lord Ahmad of Wimbledon: My Lords, I first reassure the noble Baroness and your Lordships’ House that the Government are taking the situation in Hong Kong very seriously. As I have alluded to, my right honourable friends the Prime Minister and the Foreign Secretary have spoken to their respective counterparts—and, in the case of the Prime Minister, to other members of the G7. The permanent under-secretary has also summoned the Chinese ambassador to relay our deep concerns. On the wider issue of citizenship, current citizens of Hong Kong enjoy the BNO category, which was created, as the noble Baroness knows, in 1985 and gives certain rights. It remains our view that, within the agreement signed by the Chinese and British Governments, protections offered to those citizens should prevail. On the issue of the police acting with impunity, we impress on the Hong Kong authorities that they should ensure that those committing acts of violence—whichever side they may be on—are brought to justice and held accountable. That includes those enforcing the law.

Lord Kennedy of Southwark: My Lords, people are protesting on the streets of Hong Kong for their judicial independence, their human rights and their democratic freedoms—the three principles the 1984 agreement between the People’s Republic of China and the United Kingdom was designed to protect. Can the noble Lord tell the House when the Government will demand loudly and clearly that China respect this agreement?

Lord Ahmad of Wimbledon: I assure the noble Lord that we are doing just that. We have impressed on the Chinese Government and the Hong Kong authorities that they should ensure that the attributes and provisions of the agreement are upheld. The agreement was signed by both parties. It was also deposited and is registered within the United Nations. It is our view that all rights and principles in that agreement have to be respected, not just by Hong Kong but by the Chinese authorities as well.

Lord Alton of Liverpool: My Lords, I draw the attention of the House to my interest as a patron of Hong Kong Watch. Will the Minister take the trouble to look at the Early Day Motion tabled today in  the House of Commons by almost 30 Members of Parliament—led by the chairman of the Conservative Party Human Rights Commission, Fiona Bruce MP,  and signed by the former leader of the Liberal Democrats, the current leader of the Scottish National Party in the House of Commons, senior Labour Members of Parliament and Members of other parties—calling for the Government to put on the Commonwealth agenda, not least at Kigali next year, the question of second citizenship, as the noble Baroness, Lady Northover, asked about, and to explore ways in which the international community can provide an insurance policy for people in Hong Kong who feel that “one country, two systems” is now slipping away? Is this not the sort of thing that the British Government should take the lead on?

Lord Ahmad of Wimbledon: First, let me reassure the noble Lord that we seek to uphold “one country, two systems” and will call on the Chinese authorities and the authorities in Hong Kong to do the same. As I said in answer to the question from the noble Lord, Lord Kennedy, this is an international agreement whose principles should be abided by. I will certainly take the issue of the Early Day Motion back and look at the detail. I assure noble Lords that the important thing is that we continue to raise through all international and bilateral channels the importance of upholding the rights of, and obligations to, the citizens of Hong Kong.

Lord Anderson of Swansea: My Lords, much of the prosperity of Hong Kong depends on confidence. Is there not clear evidence now that much of the business community has been relocated or is considering relocating to Singapore, which would be much against the interests of the Government of China? Are we not making it clear to China that to be in breach of the joint agreement is to be in breach of its interests in this matter?

Lord Ahmad of Wimbledon: I believe that, thus far, the Chinese authorities have shown restraint, which we welcome. Clearly, as I said in my Answer to the original Question, law and order in Hong Kong is of deep concern to us. The noble Lord raises the important issue of future investment in Hong Kong. As we have seen, the eyes of the media and the world are on the situation in Hong Kong; that will not be lost on investors. He makes an important point about political and economic stability in a given territory. I am sure that any business making a decision in respect of Hong Kong will look at that very carefully.

Lord Wilson of Tillyorn: My Lords, what has been happening recently in Hong Kong is very distressing. What started with large demonstrations against the extradition treaty—probably better called the fugitive offenders ordinance—by people who are well-intentioned, but many of whom probably misunderstood what was behind the proposal, has deteriorated into the sort of violence that is not the custom in Hong Kong; it is not the way that things happen there. That is worrying indeed. Does the Minister accept, however, that outside involvement in this is unlikely to be helpful? The key thing is for the Hong Kong Government, without outside pressure, to find ways to take this forward,   possibly through a judge-led inquiry into what has gone on, and to establish a dialogue with those who have been protesting. One hopes that among that is the way to bring this situation back to the more normal way in which Hong Kong carries out its affairs.

Lord Ahmad of Wimbledon: The noble Lord speaks about the situation on the ground with great insight. I agree with him, which is why we have consistently raised the importance of the Hong Kong authorities—particularly the Chief Executive, Carrie Lam—having a constructive dialogue with the people. According to Carrie Lam herself, it is a fact that the original proposal on which these protests were based is dead. I note that it has not yet been formally withdrawn; we are watching that very carefully. On the more general issue, it is important that Hong Kong resolves its issues within the parameters of both the agreement that has been signed and the autonomy it enjoys. On the broader issue of human rights, particularly those raised directly with the United Kingdom, wherever we see human rights usurped and the rights of citizens denied, we will raise our voice as a strong voice for human rights around the world. We have raised our deep concerns with both the Hong Kong and Chinese authorities on this issue.

Lord Flight: My Lords, does the Minister accept that the deal the Thatcher Government did with China was wise but did not cater for full-scale democracy in Hong Kong? While there is hope that the situation may move towards that, I suggest that the right posture for the time being is the deal done with China by the Thatcher Government.

Lord Ahmad of Wimbledon: I assure my noble friend that we continue to impress on both the Hong Kong and Chinese authorities, in the bilateral engagement that we have had, the importance of the principles of the agreement that guaranteed autonomy for Hong Kong. It is something that should be held; it has held thus far. Despite historic pressures, “one country, two systems” has largely held together. It is important that it continues to do so, for the agreement runs until 2047. We hope the rights enshrined in that agreement will also be upheld thereafter.

Lord Beith: My Lords, what does it say about mainland China’s attitude to the two systems that Hong Kong has a Chief Executive who seems to believe she does not have the autonomy to withdraw the offending Bill entirely and does not even think she has the autonomy to resign?

Lord Ahmad of Wimbledon: The Chief Executive can speak for herself. From our perspective, the important thing is to ensure that the principles of the Sino-British agreement are upheld and—as I have said and the noble Lord, Lord Kennedy, pointed out—that the rights and obligations under “one country, two systems” are upheld for all citizens.

Arrangement of Business
 - Announcement

Lord Ashton of Hyde: My Lords, welcome back. I hope noble Lords had a relaxing break. With the leave of the House, I will now make a business statement.
As this is my first appearance at the Dispatch Box as the Government Chief Whip—perhaps not the introduction I was expecting—I first acknowledge my predecessor, the noble Lord, Lord Taylor of Holbeach. If the last few days are anything to go by, I am in awe of how he managed to survive so long, but I must say that he looks pretty relaxed now. I am also grateful to the other members of the usual channels for their welcome and for the helpful nature of the conversations we have had over the last few days.
In view of the plans for the new Session of Parliament in October, there will be some alterations to the government business for the remainder of this Session. As I said, this has been discussed with the usual channels. Noble Lords will see from the Order Paper that the business for today has not changed, apart from the addition of three Oral Statements. There are a few changes to business this week that are not currently reflected on the Order Paper or in Forthcoming Business. A new edition of Forthcoming Business will be available as soon as I have sat down.
Tomorrow, on 4 September, the Government’s intention is that we will have the Third Reading of the Parliamentary Buildings (Restoration and Renewal) Bill. Then, as previously advertised, we will take the Report stage of the Sentencing (Pre-consolidation Amendments) Bill, which is a Law Commission Bill, and then the Second Reading of the High Speed Rail (West Midlands - Crewe) Bill. On Thursday, again as previously advertised, we will hear the two time-limited Cross-Bench debates in the names of the noble Lord, Lord Ramsbotham, and the noble Earl, Lord Kinnoull. Noble Lords will be aware that under the Northern Ireland (Executive Formation etc) Act, we have a time-limited statutory duty to debate reports that will be published and laid tomorrow. This debate will take place after those in the names of the noble Lord, Lord Ramsbotham, and the noble Earl, Lord Kinnoull, and a speakers’ list is now open.
The House will no longer sit on Friday for Private Members’ Bills previously arranged. I am grateful to the noble Lords, Lord Grocott and Lord Wigley, for the helpful and pragmatic conversations we have had. The exact timings for Prorogation are still subject to further discussions, including discussions occurring in the other place, and I will endeavour to update the House as those discussions proceed. But, dependent on events in the other place, we must all be prepared for changes in the Order Paper with little warning.

Viscount Hailsham: My Lords, in welcoming my noble friend to his new position, may I say how much I regret the departure of his distinguished predecessor, with whom I always worked with great pleasure, though we were not always in agreement?  Does my noble friend understand the importance of not facilitating an elective dictatorship, of which a former Lord Chancellor spoke so perceptibly some years ago—although he did not believe that such a work would ever be done by a Conservative Government? Does my noble friend understand that many in the Conservative Party, both in Parliament and outside, are wholly opposed to the Brexit-related policies being done in the name of the Conservative Government and will oppose them?

Lord Campbell of Pittenweem: My Lords, I congratulate the Chief Whip on his appointment. He was present throughout the questions which raised the issue of the difference between Prorogation and recess. He may have had it drawn to his attention that, in 2002, Prime Minister Blair brought Parliament back to deal with issues arising out of the possible military action against Saddam Hussein. In 2013, Prime Minister David Cameron did exactly the same in relation to the possibility of military action in Syria. Given the fragile situation in and around the Gulf and the Strait of Hormuz, may we have a copper-bottomed assurance that, if any events occur in that part of the world which justify the recall of Parliament, the Prorogation withdrawal—to which reference was previously made—will swiftly be taken advantage of?

Lord Wallace of Tankerness: My Lords, in the exchanges during Oral Questions, the noble Earl, Lord Howe, indicated that, given the Conference Recess, the length of Prorogation would not mean too many more days of parliamentary time lost. This argument has been deployed on several occasions by government spokespeople, and so I sought to try to find the dates of the Conference Recess. I do not seem to be able to find them anywhere. I congratulate the Chief Whip on his appointment, but can he point me in the direction of where I will find them, or is it the case that they have not been published and that without Prorogation the default position is that we would continue to sit next week and the week after, through the conference season?

Lord Forsyth of Drumlean: My Lords, has my noble friend seen the reports in the press suggesting that some Members of the Opposition might seize control of the agenda in this House—I understood that we were given an undertaking that that would never happen again—and use that opportunity to introduce a guillotine to this House for the first time? Does he not agree that the very purpose of this House arises from the fact that the guillotine in the Commons results in Bills coming to us that have not been properly scrutinised, and that therefore the introduction of any guillotine to this House would destroy its very purpose and create a precedent that would have serious, almost constitutionally outrageous, implications?

Lord Cormack: My Lords, I do not always agree with my noble friend Lord Forsyth of Drumlean, but I entirely endorse what he said about guillotines in your Lordships’ House. However, I wish to ask a different question of my noble friend, to whom I also offer warm congratulations, as I offer warm felicitations to my noble friend Lord Taylor of Holbeach. On  Thursday, two important debates are down in the names of private Members. Clearly, between them they will take some five hours. Should urgent business be brought before your Lordships’ House, having been endorsed in another place, can my noble friend assure the House that the business will be rearranged? It really would be utterly absurd if we did not begin a debate on a crucial national emergency until something like 6 pm on a Thursday, especially as the Friday sitting has now been cancelled. We have a duty to look at things carefully, and we should also look at them when we are not all too exhausted.

Lord Purvis of Tweed: My Lords, in Questions, the noble Earl, Lord Howe, gave the impression that the only business we would be expected to consider after Prorogation—and presumably after debate on the then Queen’s Speech—is a withdrawal Bill. But there is currently a great deal of legislation that needs to be completed, including, as the Government themselves have said, the Trade Bill. As the then Minister said in March:
“This Bill is essential to providing continuity and certainty for UK businesses as we leave the EU”.—[Official Report, 6/3/19; col. 615.]
Can the Chief Whip give clarity as to what the status of this legislation is, because some of it may not be able to be carried over into a new Session after Prorogation? If legislation such as the Trade Bill is essential for British businesses that require legal cover to conduct business with European enterprises and European businesses which currently conduct business within the UK, they will have no legal cover because we will not have time for the Commons to consider Lords amendments of the Trade Bill that this House passed with large majorities.

Lord Jopling: My Lords, I repeat and warmly support the nice things that have been said about the Chief Whip, but will he consult with his colleagues in the Whips’ Office in another place in regard to the threats which have been scattered around to some Members of the other place of taking away the whip and their possibilities of standing as Conservative candidates? Will he remind his colleagues that, in the early 1970s when we joined the Common Market, as it was then—I was a member of the Whips’ Office at the time—we had more than 30 Members of the Conservative Party who either voted regularly against the Government or abstained and that there was never any thought whatever of taking the whip away from them or tinkering about with their ability to be readopted by their constituencies? Will he tell his colleagues that many of us find these threats arrogant, inept and totally unacceptable in the historic traditions of the Conservative Party?

Lord Ashton of Hyde: My Lords, I am grateful for the questions and comments. I agree with my noble friend Lord Hailsham that elective dictatorship is not a good thing. That implies that debate is important—and this House has a good reputation for unlimited debate on important subjects. Taking into account the question of my noble friend Lord Forsyth, we should make sure that we continue our debates within the conventions that we have had for many years. I agree with him. I accept that this issue is contentious—and that is another  reason why we need opportunities over the next few days to debate issues that may or may not come to this House.
The noble and learned Lord, Lord Wallace, asked about the Conference Recess. He is correct that that has not been published. However, I would point out that this House has not sat at the end of September and the beginning of October for, I think, 80 years.
I thank my noble friend Lord Cormack for his comments. He asked about rearranging business. I made reference at the beginning of my remarks to the helpful conversations I have had with the usual channels and I shall continue to have them. I see no reason why the good relationship which has initially been established should stop. I shall make sure that the business that needs to be done will be done in a way which helps the House. However, I should point out that the Government’s business is what we have put forward and that is the usual procedure for this House.
On the questions of the noble Lord, Lord Purvis, about the Trade Bill, as far as I am aware and have been informed, all essential pre-Brexit legislation has been passed. Nevertheless, we are working on arranging with the usual channels some carryover Bills. We have agreement on that and I expect it to continue.
My noble friend Lord Jopling talked about potential sanctions on Members of the other place. I think it would be a bit presumptuous of me on my first day as Chief Whip in the House of Lords to tell my opposite number in the House of Commons how to behave. However, I am sure that my right honourable friend in the other place will pay close attention to what he said.
Lastly, the noble Lord, Lord Campbell, mentioned events in the Middle East. Of course we want to make sure that important events can be discussed, and I will discuss that with the usual channels in the normal way.

Lord Purvis of Tweed: With regard to the Trade Bill, when the Bill left this House, the Minister said that it was essential legislation. It has not been passed and is not on the statute book, and the Chief Whip is saying therefore that it is not essential. Which is it?

Lord Ashton of Hyde: I did not say it was not essential. What I said was that I have been informed that all essential pre-Brexit business has been passed. However, as it is in the House of Commons, I will raise that, but I am not in charge of business in the other place.

Parliamentary Buildings  (Restoration and Renewal) Bill
 - Report

Clause 2: The Parliamentary Works Sponsor Body

Amendment 1

Earl Howe: Moved by Earl Howe
1: Clause 2, page 2, line 32, at end insert—“(i) to promote public understanding of the purposes of the Restoration and Renewal Programme.”

Earl Howe: My Lords, I shall speak also Amendments 2, 3, 4 and 5. These amendments, taken together, are designed to address a number of concerns—raised at Second Reading and in Committee by the noble Lord, Lord Blunkett, and others—on the twin themes of engagement with specific categories of individuals about the restoration and renewal programme and promoting an understanding of the purposes of the programme, in ways I will explain more fully.
First, I want to thank the noble Lord, Lord Blunkett, for his constructive and collaborative approach in working with the Government to formulate the wording of the amendments now before us. The Leader of the House and I were sincerely impressed by the passion and sincerity with which he made his case, and he succeeded in persuading us that appropriate amendments to the Bill were warranted. I hope the House will agree that we have arrived at a good place in this respect.
The first amendment seeks to ensure that the sponsor body promotes public understanding of the purposes of the restoration and renewal programme. The Joint Committee that undertook pre-legislative scrutiny of the Bill detailed the importance of the public understanding the restoration and renewal programme. The noble Lord, Lord Blunkett, tabled an amendment in Committee that was quite similar to the one we are debating today, and he was supported by a number of other noble Lords in the arguments that he put forward.
As noble Lords may recall, I outlined in Committee why that amendment was not strictly required, given what the shadow sponsor body has set out it will do in promoting understanding of the restoration and renewal of the Palace of Westminster. For example, the restoration and renewal programme’s current purposes, as set out in its vision and strategic themes, includes the aim to:
“Open up the Houses of Parliament, improve access and encourage a wider participation in the work of Parliament”.
Nevertheless, we have listened to this House and recognise the desire of noble Lords that this amendment be included in the Bill to place this specific duty on the sponsor body.
The second amendment in the group relates to staff and public engagement. This amendment would require the sponsor body, in formulating the strategic objectives of the parliamentary building works and making strategic decisions relating to it, to seek the views of those employed by Parliament and working for Members, as well as the public at large. Again, as noble Lords will recognise, I outlined in Committee the engagement the shadow sponsor body has already started to undertake with staff and will be undertaking with the public in the future. For example, the shadow sponsor body circulated a questionnaire to Members and their staff with the aim of understanding what they would like to see from restoration and renewal of the Palace. I understand that the shadow sponsor body will publish these findings in October. Furthermore, the body will soon be considering its public engagement strategy.
Since the conclusion of Committee, we have had the chance to consider this matter further. We recognise the will of this House that provision should be made in the Bill to ensure that the sponsor body engages with staff and the public in undertaking its work.   I thank the noble Lord, Lord Blunkett, again for his collaborative approach in formulating this amendment. I am sure that he, the noble Baroness, Lady Smith, who made a similar suggestion in Committee, and members of the pre-legislative Joint Committee will welcome this amendment. It will ultimately be for the sponsor body, once established, to determine how it fulfils this duty, but I am sure all noble Lords will join me in encouraging the sponsor body to build on the engagement the shadow sponsor body has undertaken to date.
Amendment 5 seeks to ensure that the sponsor body will carry out the works with a view to facilitating improved public engagement with Parliament and participation in the democratic process, especially by means of remote access to Parliament’s educational and outreach facilities and programmes. I thank the noble Lord, Lord Blunkett, once again for agreeing to work with the Government on this amendment. The pre-legislative Joint Committee that examined the draft Bill, of which the noble Lord was a member, argued that the term “renewal” requires an outward-facing approach to the UK Parliament’s role at the centre of our democracy. In Committee, I outlined that the Government agree that the outputs as part of restoration and renewal should be sufficiently flexible to accommodate any future reforms which could facilitate opportunities for outreach and engagement. I was pleased to report that the shadow sponsor body had already outlined, as part of its strategic vision and themes, the aim to,
“reconnect people from across the UK with their Parliament through improved education and visitor facilities, physical and digital access”.
I also outlined in Committee the excellent work already done in this area through various parliamentary engagement and outreach programmes across the UK. The UK Parliament’s education and engagement service engaged more than 2.2 million people in 2018-19, of whom approximately 1.4 million were engaged face to face. The quality of this engagement is reflected in the feedback from 94% of participants, who rated it “good” or “excellent”. Furthermore, the education service also welcomed 70,226 school visitors in the year to mid-April 2018. The Lord Speaker’s Peers in Schools programme has seen more than 2,000 Peers in Schools visits since the programme began in 2007. The education service also trained more than 2,900 teachers to help them engage their students in learning about Parliament and democracy. Nevertheless, we have listened again to the will of this House that an amendment relating specifically to remote connectivity and outreach programmes should be included in the Bill. In considering this matter, I encourage the sponsor body to work with Parliament’s education and outreach team in order to build on the excellent work it is undertaking.
The other two amendments, Amendments 3 and 4 in the name of my noble friend, are minor and technical; they merely ensure consistent references to the parliamentary building works in Clause 2(4)(b) and 2(4)(g). The Government have sought to ensure that the will of the House is facilitated when it is clear that a particular course of action is preferred. These amendments are a clear example of our determination to see that this is done. Each of the amendments in  this group is designed to ensure that the necessary engagement work is undertaken and borne in mind by the sponsor body.
With renewed thanks to the noble Lord, Lord Blunkett, for enabling us to achieve the express will of the House on these important issues, I beg to move.

Lord Blunkett: My Lords, understandably, over the summer and this afternoon the minds and hearts of parliamentarians have been somewhere other than on debating the restoration and renewal Bill. However, I congratulate the noble Earl on his new appointment and role, and I want to put it on the record that, if we were able to conduct wider business in the way that I have experienced negotiations with the noble Earl, we might get a lot further a lot faster, and some of the divisions that are bedevilling our country might be settled more easily.
I appreciate that, although restoration and renewal will cost the nation billions of pounds and the Bill might be very controversial, it does not compare with the situation that we are in in respect of our relationship with Europe and all that goes with it. However, I think that, in time, people will look back and be grateful to this House for the work that it did at Second Reading, in Committee and, now, on Report in relation to the measures that we are taking. They will appreciate the importance of getting agreement on restoration and renewal, speeding the Bill through and ensuring that time is not lost in getting on with the works.
I want to reciprocate by saying that it has been a great pleasure to do business with the noble Earl and his team. The Bill team, Cabinet Office officials and Members and officials in this House have been extraordinarily helpful, but none if it would have been possible without the wider support of Members of this House from all the political party groups. I thank and pay tribute to them for their voices not only in Committee but behind the scenes. We have made genuine progress, which is why I withdrew the amendments that I had tabled and agreed to put my name to those spoken to so eloquently this afternoon by the noble Earl. It is really important to understand that this House is not an internal process but the actual beating heart of our democracy. The outward-facing nature of what we are doing, as the noble Earl has described, will, in the years ahead, become critical to people’s understanding, first, of what is happening and why and, secondly, that this is a crucial part of our democratic process. The engagement and participation in democracy and the processes and programmes of this House and the other place will stand the test of time.
The noble Earl said that I had been passionate on this subject. It is quite hard to be passionate about the restoration and renewal of the Palace of Westminster, but he is right. Underpinning my desire to bring about these changes was the belief that, when our politics are more settled and people come to see the investment that we are making in the Palace and the subsequent and consequent investment in the world heritage site more broadly, they will understand that giving the sponsor body a clear remit was crucial. I just want to put it on the record that when the Bill was considered  by the Joint Scrutiny Committee, it was made clear to us that the sponsor body, and subsequently the delivery authority that it will oversee, will take their directions and objectives from Parliament. The one way in which Parliament can now ensure that the sponsor body is clear about what is required and can work in a flexible and positive fashion is to ensure that the Bill is clear. With the help of the Government, and in particular the noble Earl, I think that we have been able to make it a lot clearer and the sponsor body therefore has a much more positive remit.
Extremely good work by both parliamentarians and officials is going on behind the scenes and I suggest that the sponsor body should connect with what is already taking place in relation to, for instance, the Select Committee engagement team. Two small research projects have recently been publicised, involving small amounts of money, on the work of Select Committees. On the back of the Senior Deputy Speaker’s work on Select Committees of this House, we have discussed the importance of getting that right for the future. I would simply ask the sponsor body to connect with what has already taken place and perhaps—as part of the substantial investment that will go into the physical infrastructure—put a relatively small amount of money into such projects, which can stand the test of time and will be valuable for the future.
I declare my interest, as mentioned in the register, in relation to the Sir Bernard Crick Centre for the public understanding of and engagement with politics. I suggest that the work that it has been doing behind the scenes—it made a presentation to the scrutiny committee—should be taken up. The work of the centre, and that of others in the academic field, could be extremely helpful and with relatively small amounts of money—although much more substantial than, say, £5,000 for a research project—could yield fruit. If we get it right now, we will get it right down the line. Although today is probably not the day for me to say much more due to what is going on outside and in the other House, which will be of critical importance to the future of our nation, I think people will be grateful to the Government for their co-operation, and to parliamentarians of all persuasions, for the way in which they have set about ensuring that the Palace of Westminster will continue to be the beating heart of our democracy in the generations to come.

Lord Haselhurst: My Lords, I fully support the amendments on the Marshalled List, particularly Amendment 5 which refers to “facilitating improved public engagement”. I wonder whether there is still a possibility that that engagement could be other than remote. A question was asked in the other place about the possibility of access to the Elizabeth Tower for visitors when those works are completed, in a way that is independent of decant works which by then may have started or be about to start.
This leads me also to inquire whether we have closed our minds or shut the door on access to Westminster Hall. I know that there are complications but, if there were a means of allowing people to come through Westminster Hall on a particular line of route and then exit in the usual way, that would be a more  meaningful way for people to engage. Those of us who have taken parties round the Palace on many occasions are impressed by the magic felt by many people, the emotional contact they may experience by being here. To lose that entirely would be a shame. Such access may be impossible in view of the works that have to take place in the Palace, but I hope that we will look at the possibility.
I am minded of what is available in the visitors’ centre on Capitol Hill in Washington where tableaux tell the story of Parliament through the ages. There is also the possibility of viewing a film. Perhaps a passage through Westminster Hall could be allowed and the Grand Committee Room—or the Westminster Hall chamber as it has become known—might also be a place where a film could show the work of Parliament and what it is all about. I hope we have not told ourselves that it cannot be done. It would be encouraging to know that this possibility is at least being investigated so that, by the time we have to decant from the building, there might still be an opportunity for something more than remote access for members of the public.

Lord Norton of Louth: My Lords, I add my thanks to my noble friend Lord Howe for the amendments and place on record my thanks to the noble Lord, Lord Blunkett, for all the work he has done on securing these amendments. They are extremely important—in particular, as my noble friend Lord Haselhurst would add, Amendment 5.
This might be the Parliamentary Buildings (Restoration and Renewal) Bill, but we and the sponsor body need to look at it as the Parliament restoration and renewal Bill. It is not simply a case of bricks and mortar; it is about the space and how it is employed for the future. Picking up on what my noble friend said, it needs to be adaptable space. That is the point that needs to be put over to the sponsor body: not only should we use the space in the way indicated by my noble friend but there are going to be changes that we cannot anticipate in the way that we might want to use it. This place was designed originally to accommodate meetings in committee rooms dealing with private Bills. That did not take into account how Parliament would evolve, particularly as a public body. We cannot anticipate all the needs in future, so adaptability is going to be a clear theme.
I reiterate the point that the space can be used to connect with people outside. That is a crucial point that has already been stressed. We need not only to educate but to be able to engage. That would play to the strengths of this House in particular, but the institution of Parliament as a whole needs to be able to connect with people outside in different ways, including in ways that, as I say, we might not able to anticipate at the moment—so we need to have that space available but not rigid.
So we need to be outward-looking and adaptable. I reiterate my thanks to the noble Lord, Lord Blunkett, for all the work he has done on this. I was delighted with the agreement that was reached with the Government, so I very much support the amendments before us.

Baroness Scott of Needham Market: My Lords, I will add my thanks to all those who have worked during August to come up with a solution that meets not just the needs of those moving the amendments but the sentiments that were expressed during the debate. As a member of the shadow sponsor body, I think that this gives some clarity about the wishes of the House and the responsibilities of the sponsor body when it gets its substantive form.
Right from the beginning, outreach and education have been an absolute priority for the sponsor body. I assure the noble Earl that we have had a lot of discussions with the education and outreach department already, and I assure the noble Lord, Lord Norton, that flexibility is one of the key things that we are thinking about in design. Obviously not every room in the Palace can be entirely flexible—there are too many constraints, particularly of heritage, for that—but one of our overall objectives will be to end up with a much more flexible space because, as the noble Lord said, we simply cannot predict where we are going to be in future.
The shadow sponsor body has always felt, as the noble Lord, Lord Blunkett, has previously so passionately described, that the renewal of Parliament is not just about the building—that is extremely important to us. When we think about overall renewal, some of the issues are matters of operation—about how we do things—some are procedural and some are cultural. The Houses of Parliament are extremely conservative organisations that are quite resistant to change, so we have to accept that there is also cultural thinking.
A lot of these matters need attention from Parliament. The noble Lord, Lord Blunkett, was right to talk about the need for close working between the shadow sponsor body—the sponsor body, going forward—and the rest of Parliament, and how we do these things together. It is certainly not for the sponsor body to start telling Parliament what its procedures should look like and so on—so there is very much a need for close working on that.
My final point is that it has become clear to me, having chaired a number of sessions—particularly on the question of accessibility, but the point is wider—that there is an awful lot that we could do now. We do not have to wait for the physical restoration of this building. I urge the House to find ways of exploring some of the things that could be done right now to make the building more accessible—and I mean accessible in its full sense in terms of the language that we use and the way that people engage with this place—while we wait for more tangible physical accessibility improvements further down the road.
We need to think about how Parliament creates the space to think about those things when there is so much else going on. If Parliament is to come through what is a particularly torrid time at the moment, we really must give some attention to these matters.

Lord Cope of Berkeley: My Lords, I too support these amendments. Seeing the reference to “remote access” in one of them, I thought it not inappropriate to draw the House’s attention to the tremendous changes there have been in recent years. I  first became a Member of the House of Commons 45 years ago. Since then it has changed immensely, largely because of the electronic advances that there have been. The amount of contact with constituents that Members of Parliament now have through emails and so on is one thing. You can also watch Parliament any time you want on the parliamentary television channel. This started with your Lordships’ House, and broadcasting from the Commons followed. There have been tremendous advances and there is no doubt at all in my mind that these have not stopped but will go on in ways that we cannot envisage—any more than we could have envisaged 45 years ago that things would be as far advanced as they are now. So we are not just starting this process; we are hugely advanced along it. It will speed up, in all probability, and of course the sponsor body must take account of it as it goes about its work on this building.

Baroness Wheeler: My Lords, we welcome the Government’s amendments in this group, and their focus on public engagement and awareness. Amendment 1 creates a duty on the sponsor body to promote public understanding of restoration and renewal, while Amendment 2 introduces a need for the sponsor body to ensure the works facilitate engagement and a participatory democracy. Amendment 5 ensures that the sponsor body carries out its duties with the views of Members, staff and the public at the front of its mind. We also welcome Amendments 3 and 4, which strengthen the reference to the parliamentary building works in regard to ensuring the safety and security of staff and the public, as well as to educational facilities.
At the start of the Bill’s passage, one of the main areas on which we sought government reassurance was engagement with the public, as well as with staff and Members in both Chambers. The Joint Committee recommended that the sponsor body should,
“promote public engagement and public understanding of Parliament”,
and we are pleased that the Government now fully accept this. Engagement must be at the heart of the programme of restoration and renewal, as this Palace, as well as the democratic processes and structures it represents, can often feel very distant to many people across the country. It is vital that there is a strong relationship between the sponsor body and the public, so that they have confidence in the programme throughout the process. These amendments help to alleviate our concerns and ensure that restoration and renewal becomes about far more than the necessary bricks and mortar, rewiring and replacement, and sewerage and stairways. They also allow us to change the way Parliament looks and feels, both inside and out.
Like other noble Lords, we read with great interest the results of the 2019 Members survey on R&R, confirming the themes and issues raised during the passage of this Bill in both Houses on accessibility, remote and digital integration, and safety, security and protection. The first survey showed just how vital regular communication, consultation and engagement are now and will be as the programme progresses to its successful completion. In particular, this is a working building for more than 8,000 members of staff, and the omissions in the original Bill on the importance of  seeking their views about the works have now been rectified. Amendment 5 is a welcome step forward in helping improve their working conditions throughout restoration and renewal, and this must be an aim for the sponsor body.
In closing, I of course pay tribute to my noble friend Lord Blunkett for his tireless work on these issues throughout the Bill’s passage, and to the Government for their willingness to discuss and address our concerns and arrive at the good place to which the Minister referred.

Earl Howe: My Lords, I am most grateful to the noble Lord, Lord Blunkett, for his very kind remarks and the constructive suggestions he has made. I express once again my appreciation to him for working with us as he has done and for the support he has demonstrated for these amendments. I am grateful, too, to other noble Lords who have endorsed the approach that we and the noble Lord have taken. It has been important throughout the Bill’s passage that we should listen to all Members and, where possible, seek to work with them towards an agreed position. I hope and believe it is clear that we have done exactly that. I thank other noble Lords who have spoken in the debate: my noble friends Lord Norton, Lord Cope and Lord Haselhurst, and the noble Baronesses, Lady Scott and Lady Wheeler.
My noble friend Lord Haselhurst asked two questions that go back to the issue, which I know has been considered by both Houses, of whether it would be possible to retain a foothold, so to speak, during the R&R programme in the Houses of Parliament regarding Westminster Hall and the Elizabeth Tower. I can tell him that these matters were partly covered at earlier stages of our debates, but it was agreed by both Houses in early 2018 that the Bill should allow for a full and timely decant of the Palace without retaining a foothold. Analysis by the programme in 2017 found that continued use by Members and/or the public of Westminster Hall or the area surrounding it would be highly disruptive and costly for no additional quantifiable benefit. The costs would be connected to maintaining a secure perimeter in close proximity to construction works and the additional cost to construction from managing a complex and partially occupied site. Having said that, access to the Elizabeth Tower could be a different matter. In fact, it is a matter for the sponsor body and Parliament to decide in due course. Members of the other place and noble Lords will be free to offer their view to the sponsor body on this issue as part of its consultation strategy.
As I said, these amendments build on the current work the shadow sponsor body is undertaking in these areas, in my judgment very capably. What matters now is the future. Like all noble Lords, I look forward to seeing how the sponsor body builds on this work and fulfils the specific obligations the amendments set out.
Amendment 1 agreed.

Amendments 2 to 5

Earl Howe: Moved by Earl Howe
2: Clause 2, page 2, line 35, at end insert—“(3A) In performing the duties under subsection (2)(a) and (b), the Sponsor Body must make arrangements for seeking the views of—  (a) people employed in or for the purposes of either House of Parliament,(b) people working for members of either House of Parliament (whether or not for payment), and(c) members of the public.”
3: Clause 2, page 2, line 39, leave out “those” and insert “the Parliamentary building”
4: Clause 2, page 3, line 11, leave out “those” and insert “the Parliamentary building”
5: Clause 2, page 3, line 12, at end insert—“(ga) the need to ensure that the Parliamentary building works are carried out with a view to facilitating improved public engagement with Parliament and participation in the democratic process (especially by means of remote access to Parliament’s educational and outreach facilities and programmes);”
Amendments 2 to 5 agreed.

Amendment 6

Lord Blunkett: Moved by Lord Blunkett
6: Clause 2, page 3, line 15, leave out from “that” to end of line 18 and insert “opportunities to secure economic or other benefits of the Parliamentary building works are available in all areas of the United Kingdom.”

Lord Blunkett: I should apologise to the House because my lack of surefootedness, if I might put it that way, has resulted in Amendment 6 coming back to the House this afternoon. As Members will recall, we discussed it in Committee and I inadvertently did not press it to the vote, so I had better make it clear from the beginning that I am doing so this afternoon. It is a very simple amendment that fulfils undertakings given over recent weeks and months. I pay tribute to Neil Gray, the Member of Parliament who has been working on this in the House of Commons and with the shadow sponsor body, of which he is a member.
The amendment is about the opportunities to secure economic and other benefits right across the UK. Placing it in the Bill will reassure people across the UK that they will not simply be contributors as taxpayers, but will see benefits in employment, supply and the kind of facilities we want for the future. I will not speak at length because we covered this in Committee, but we have seen it with the Elizabeth Tower. We know from other major infrastructure projects, at least one of which I support, that this can not only yield benefits but get people’s commitment and, if I might use the term, understanding of what is taking place at the same time. I hope this will be a consensual amendment and that we can agree it.
I make one final point. I hope that when the sponsor body comes forward with the options in relation to the extent of investment, it takes an ambitious view, and is up front about what we are going to expend in cash. I hope that we will not get into a position such as we did with HS2 or, for that matter, the Scottish Parliament. It is important to get this right from the beginning. The original estimates, which I will not even mention, were so wide of the mark that it is important that we put them to one side and are clear with the public over a very long period. I noticed that the announcements on education spending made over the weekend were rolled up over the years to double the actual amount that will be spent in the final year of that spending  commitment, if it comes to fruition. My good friend Gordon Brown used the same trick when he was Chancellor of the Exchequer, but it does not help, because the public eventually catch up with you.
My little plea to the shadow sponsor body is to be brave, come out with the real figures, make sure that people know that they are over the next two decades and not next week, and then let us go forward together on making this project work. I beg to move.

Lord McNicol of West Kilbride: My Lords, we welcome Amendment 6 from my noble friend Lord Blunkett, and strongly support his aim to specify in the Bill that the economic and other benefits of the parliamentary building works are supported across the whole of the UK.
Businesses across the UK must benefit from the economic opportunities that large-scale, government-funded projects such as this bring. This must remain at the forefront of the sponsor body’s mind throughout the works. Contracts must be awarded to businesses across the UK, to foster and build greater connectivity between all corners of the country and the Palace of Westminster.
Despite being in London, this building represents and connects with every region, and we know that the key challenge with this project is to make all nations and regions of the UK feel engaged with it, so we support Amendment 6.

Baroness Evans of Bowes Park: I thank the noble Lord, Lord Blunkett, for retabling this amendment and reassure him that we continue to support it. As he said, we spoke to it in Committee, and I emphasised the Government’s support. It was very kind of him to take the blame on his shoulders, but it is only fair to say that we were all at fault for this failing to be approved in Committee.
As noble Lords are aware, the amendment places in the Bill a requirement on the sponsor body, in exercising its functions, to ensure that opportunities to secure economic or other benefits of the parliamentary building works are available in all areas of the United Kingdom. The Government have always sought to encourage the shadow sponsor body to give thought to how the delivery authority will engage with SMEs and businesses across the UK in their work to restore the Palace of Westminster. The noble Lord alluded to this already happening on other projects being carried out on the Parliamentary Estate, such as work on the restoration of the Elizabeth Tower.
In the Commons, an amendment to spread the economic benefits across the UK gained the support of the House. However, we had some concerns with its drafting regarding procurement law, which I set out in Committee. The Government therefore committed to support the drafting and tabling of this alternative amendment, which addresses those concerns. We consider that this amendment retains the spirit of that passed in the other place, while also adhering to public procurement law, so we are delighted to support it.
Amendment 6 agreed.

  
Clause 6: Relationship between the Sponsor Body and Parliament

Amendment 7

Baroness Wheeler: Moved by Baroness Wheeler
7: Clause 6, page 5, line 11, at end insert—“( ) recommendations from the Sponsor Body for the future maintenance of the Palace of Westminster over the longer term after completion of the works;”

Baroness Wheeler: My Lords, this is an important amendment in the name of my noble friend Lady Smith. It aims for us to learn the lessons of the past and ensure that we have the necessary long-term plans and steps in place after the new building has been completed and handed back to Parliament to facilitate its ongoing and future maintenance and improvement.
Amendment 7 takes the Minister at his word in Committee, when this issue was raised by us and a number of noble Lords. Our original proposal was to incorporate future-proofing recommendations under the sponsor body’s reporting requirements in Schedule 1, but this amendment follows the Minister’s suggestion that it could better placed in Clause 6 as part of  the parliamentary relationship agreement and that recommendations on the future maintenance of the Palace over the longer term be part of the hand-back arrangements.
I thank the Minister and the Bill team for their helpful discussions and reassurances since Committee, particularly in relation to the sponsor body’s reporting processes and business case development. Obviously, we recognise that the sponsor body will be abolished following the completion of the parliamentary works, so it is important that we have clarity now on exactly how future maintenance of and improvements to the Palace will be facilitated and taken forward. I understand that the latest view from the Government is that it should be included in the sponsor board business case summary and not that of the PRA. I look forward to the Minister’s confirmation of this. I would also be grateful if he would facilitate a meeting on this issue between the sponsor board and my noble friends so that we can be assured that effective future-proofing measures are a key part of the R&R programme.
Throughout this process, we have stressed that we must ensure that the estate does not fall into its current level of disrepair. We had 40 fires between 2008 and 2012; 4,000 windows need to be repaired or replaced; 40% of pipes, ducts and cables will be at critical or high risk of failure by next year; most building services will be at a high risk of failure by 2025; we rely on a sewage ejector system that is more than 130 years old; and asbestos can be found everywhere.
As we said in Committee, the can has been kicked down the road for far too long. While parliamentarians have not wanted to be seen spending money on themselves, inaction has come at a heavy price. We are now spending huge amounts of money on everyday maintenance and repair, and it has been estimated that every year of  delay increases the cost of the works by £100 million. We must not get to a point again where the Palace is at risk of a catastrophic failure and the building can be described as no longer fit for purpose. Using the expertise gathered by the sponsor body, it would be  of great benefit for the sponsor body to produce recommendations on long-term maintenance—ideally on five-year, 10-year and 20-year plans which can be reviewed. Making specific safeguards now will save us money, save this building and save future parliamentarians from facing a similarly dire situation in a few decades’ time. I beg to move.

Baroness Scott of Needham Market: My Lords, I am sure that the sponsor body would be happy to meet the noble Baroness and her colleagues—indeed, any noble Lord on any matter relating to this programme. I may regret saying that, but it is important that the shadow sponsor body and the sponsor body are as open and receptive to Members as it is possible to be. I also give the assurance that future-proofing the work is very much part of the design brief that the shadow sponsor body will be working towards. Anyone who has ever spoken to any of the contractors trying to do the work in this place will know that one of their biggest problems is simply getting access to things—they have all been buried and hidden underneath more modern work. Given this opportunity to take it all out and start again, we would certainly expect one of the outcomes to be the facilitation of future work, be it ongoing maintenance or larger jobs that may need doing in 50 or 60 years.

Earl Howe: My Lords, I am most grateful to the noble Baroness, Lady Wheeler, for speaking to this amendment, which, as she made clear, provides that the parliamentary relationship agreement may include provision about recommendations from the sponsor body for the future maintenance of the Palace of Westminster over the longer term after completion of the works.
Let me say straightaway that I agree it is important that, after completion of the parliamentary building works, the Palace of Westminster is maintained for the future and does not fall back into its current state of disrepair. Having said that, I think that there are other mechanisms better suited to achieving what the noble Baroness is seeking to achieve than an amendment to this Bill. I would go further and say that this amendment is not at all necessary. I hope I can provide the House with sufficient reassurance on that point.
This amendment places a provision in the Bill that the parliamentary relationship agreement may require the sponsor body to provide recommendations for future maintenance of the Palace. The contents of this agreement will be for the sponsor body and corporate officers of both Houses to determine. The overarching reassurance I can give about the future maintenance of the Palace over the long term is that this is not at all an afterthought. There are already several mechanisms in place that will shape such maintenance.
First, as I am sure the noble Baroness appreciates,  it would not be the sponsor body itself which would  be undertaking future maintenance of the Palace. As  noble Lords will be aware, it is likely that the sponsor body will be abolished following completion of the parliamentary building works, given that the purpose of the Bill and the bodies it establishes is simply to complete the parliamentary building works—that is, the restoration and renewal of the Palace of Westminster.
That said, the Bill enables the sponsor body to work with the parliamentary authorities to put forward recommendations and practices to ensure that a robust maintenance plan is established for the future. Here I direct noble Lords’ attention to Clause 2(2)(h) of the Bill, which places a duty on the sponsor body,
“to deal with matters relating to completion of the Parliamentary building works, including the making of arrangements for the handing over of the buildings to which those works relate”.
It is common practice with major construction works where long-term maintenance is envisaged for maintenance teams to work alongside the construction engineers in the final stages of the project when major infrastructure is being commissioned. This ensures that a thorough understanding of operating and maintaining the installed systems is provided for. Incidentally, I understand that this kind of training and familiarisation could well extend over the final year of the project.
Therefore, before the sponsor body is abolished and as part of the duty set out in Clause 2(2)(h), the sponsor body may wish to consider training House maintenance staff to ensure they are fully briefed on the new equipment and assist in developing appropriate plans to ensure that, as much as possible, the Palace is appropriately maintained in the future. As it is envisaged that the sponsor body would not be responsible for future systems, it is likely that it would work closely with the House administrations as part of the training on new systems and formulating future plans.
In terms of monitoring the future maintenance of the Palace after it has been handed back to Parliament, House authorities could provide updates on ongoing maintenance of the Palace through the appropriate domestic committees. In addition to Clause 2(2)(h), the parliamentary relationship agreement—the PRA—could also further outline what is expected in terms of future training. The PRA is expected to include an agreement between the sponsor body and Parliament about the process for handing the completed works back at the end of the programme, before the sponsor body is abolished. This would likely include further details regarding the training on the matters I outlined a second ago. However, as I said, Clause 2(2)(h) is crucial in dealing with this matter, given that the sponsor body is likely to be abolished following completion of the works, thus limiting the means to enforce any of the obligations in the PRA.
I said that future maintenance is not at all an afterthought. The shadow sponsor body has already demonstrated that it is thinking about the future maintenance of the Palace. Through the publication of the vision and strategic themes document, the shadow sponsor body has already committed to taking account of the need to deliver an outcome which provides an effective future maintenance solution for the Palace. This document has already been approved   by both House commissions and published on the restoration and renewal website. Among other points, the document states that the sponsor body must:
“Deliver a refurbishment programme that minimises but also facilitates future maintenance and improvement”,
by delivering “operational efficiency and longevity”. Secondly, it states that there must be a focus to:
“Optimise operating and capital costs through a focus on whole-life costing; and achieve operating cost targets”.
Whole-life costing means that decisions must be taken based not solely on capital costs but on the sum of those, plus the costs of operation and maintenance over the whole of the operational life. In essence, this means minimising the sum of capital and operating costs averaged over the lifetime of the installation.
I mentioned mechanisms plural. The second point for noble Lords to bear in mind is that the future maintenance of the Palace will also form part of the outline business case brought before Parliament for approval. Importantly, the outline business case will be developed in line with the principles of Her Majesty’s Treasury’s Green Book, which require that the costing is done on a whole-life basis. This includes maintenance over any future timeframes as appropriate, which may of course differ between different aspects.
It might be helpful if I explain that, in following the HMT Green Book principles, the business case will adopt a five-case methodology to provide decision-makers with a framework for structured thinking. The cases are as follows: strategic, economic, commercial, financial and management. The consideration of whole-life costs is a fundamental focus of the financial case and is a critical input for the economic appraisal in the economic case. As I have mentioned in previous debates on the Bill, the shadow sponsor body has already given the assurance that the outline business case it prepares will follow the Green Book principles, thus taking this matter into account. Therefore, the requirement and cost of future maintenance will be a consideration during the design stage of the programme, which will require approval from noble Lords.
Thirdly, the Bill already permits the sponsor body to make recommendations for the future maintenance of the Palace. It could do so as part of the reports that it produces, relating to the progress and completion of the parliamentary building works under paragraph 27 of Schedule 1 to the Bill, which must be laid before Parliament and published. I hope that the noble Baroness will agree that the combination of the mechanisms that are already in place to address the future maintenance of the Palace makes her amendment unnecessary. I am sure that, if she wants to discuss this matter further—the noble Baroness, Lady Scott, helpfully indicated this—members of the shadow sponsor body would be more than willing to engage with her.
In both Houses, we have outlined throughout the course of the Bill that, at its core, its key aim is to secure the Palace of Westminster for future generations. The process of restoration and renewal offers a great number of opportunities in which we as Members will be able to influence and prioritise what we want the outcomes to be. On that basis, I hope that the noble Baroness will be content to withdraw the amendment.

Baroness Wheeler: I thank the noble Earl for his reassurances on the importance of this matter and for his thorough and helpful explanation of both the reporting and future monitoring delivery arrangements. I feel very reassured. Obviously, I thank the noble Baroness, Lady Scott, in particular for her willingness to meet with me and my colleagues to discuss this further. I certainly welcome the reassurance, and on that basis I beg leave to withdraw the amendment.
Amendment 7 withdrawn.

  
Schedule 1: The Parliamentary Works Sponsor Body

Amendment 8

Lord Wallace of Tankerness: Moved by Lord Wallace of Tankerness
8: Schedule 1, page 19, line 17, at end insert—“( ) A report under this paragraph must include the Sponsor Body’s best estimate of the timeline for the Palace restoration works, including likely dates for the decant of each House and the estimated date of completion.”

Lord Wallace of Tankerness: My Lords, when I moved an amendment in Committee seeking a timeline to be outlined by the sponsor body, it was not my original intention to move an amendment on Report. However, having listened to the debate and the comments made, I said at the end of the debate that there was at least merit in considering whether to come back to the issue. I have done that, albeit, crucially, in a different way—that is, with a similar amendment but with a crucial difference.
As was said on a number of occasions when this was debated in Committee, large infrastructure projects have a reputation for going over time and sometimes over budget. Having had the experience of being one of the original Members of the Scottish Parliament, I am certainly well aware of that and of the publish backlash it can sometimes cause. That is why it is important to try to find a way to ensure there is transparency, information and explanation. It is intended not to initiate a blame game but to find a way in which, by sharing information, any possible blame can be mitigated through proper explanation.
Nor is it intended to be a requirement that everything is pinned down to the last day. As the noble Baroness, Lady Smith of Basildon, said in Committee when she supported my amendment:
“We do not need to say, ‘This will happen on 3 January 2022’, but it should be possible to have an idea of a timeframe for when certain things are likely to happen. That would help with public engagement and the engagement of colleagues around the House”.—[Official Report, 22/7/19; col. 641.]
That is the spirit in which I move this amendment—not that one wishes to be precise to the very day, but rather that there can be an indication as to when some things are likely to happen. That is particularly the case with regard to the decant. As I indicated in Committee, and as was indicated in the Joint Committee report on the draft Bill, issues that could lead to delays have arisen in relation to Richmond House. As we progress, it   would be useful to know just how that is progressing and, if there are particular problems, that these can be identified sooner rather than later.
In Committee, the noble Earl, Lord Howe, expressed concern about the sponsor body having to provide an,
“assessment of timings at the consultation stage”.—[Official Report, 22/7/19; col. 642.]
He indicated that “at best” there would be rough estimates, although he did say he had some “sympathy” for the clarity I was seeking. That is why there is a crucial difference between this amendment and the one I moved in Committee. In Committee the amendment was related to Clause 5, which deals with the publication of a consultation strategy. This amendment seeks to add to the report the sponsor body has to make to Parliament at least once a year a paragraph that would relate to a timeline. That would be helpful for Members, and indeed for the wider public.
If it is not possible for the Government to accept the words of this amendment, I very much hope the Minister will be able to indicate that the spirit of the amendment is agreed to. I beg to move.

Baroness Wheeler: My Lords, we welcome and fully support the principle behind Amendment 8, which underlines that the work should be carried out without delays and must be cost effective. The sponsor body has said it expects the current timeline for the project to be around 10 years, from the mid-2020s to the mid-2030s. Of course, there remains some vagueness around this length of time, and we hope the sponsor body is able to provide a more detailed timeline as soon as possible, with some clarity on milestones and gateways for both the decant and the completion of the full works. Obviously, this will most likely come after the business case has been presented and discussed by Parliament. Nevertheless, providing clear information on timelines and milestones will most certainly be important for public engagement and the engagement of staff and Members. We very much support this amendment.

Earl Howe: My Lords, I am grateful to the noble and learned Lord, Lord Wallace of Tankerness, for his amendment, which would require the sponsor body’s reports on the progress made on the parliamentary building works to incorporate a timeline for the works that would include likely dates for decant and completion. As the noble and learned Lord said, he tabled a similar amendment in Committee, to the effect that as part of its consultation strategy the sponsor body must publish a timeline for completion of the Palace restoration works, including details on the dates of decant and return to the Palace.
In my response in Committee, I agreed that all noble Lords would—quite obviously—wish to seek further clarity on dates around decant, and I am in absolute agreement with the noble and learned Lord’s point that the sponsor body should publish details regarding decant and completion of the works not just once but throughout the course of the project. Here it is important to convey that the shadow sponsor body  has always explicitly recognised that, as part of the sponsor body’s reports as set out in paragraph 27 of Schedule 1, it would rightly be required to include timescales on decant and the progress of the works. I can confirm that the shadow sponsor body is in agreement with this approach and therefore the expectation is that the reports produced by the sponsor body will include information on the timetable for the works, including details on timings for decant and return to the Palace.
I spoke at some length in Committee on various points addressing the issue raised by the noble and learned Lord. However, I thought it important to clarify what the Bill requires the sponsor body to do as regards reporting. Under the Bill, the delivery authority is required to formulate proposals for the parliamentary building works, including the timing of those works. These proposals are provided for in Clause 2(2)(e). Parliament will need to approve the proposals before any substantive works commence. If for any reason those timings change significantly, the sponsor body will need to come back to Parliament for further approval. The parliamentary approval of these proposals, as well as the shadow sponsor body outlining its agreement that the sponsor body should include information relating to the timeline for the works in reports it produces, will, I hope, provide noble Lords with the reassurance that this information will be forthcoming.
This is a matter that will surely interest all noble Lords throughout the currency of the works, whether that is before commencement, during or near their completion, so let me again thank the noble and learned Lord for tabling this amendment. I hope that I have provided him with significant reassurance on this important matter.

Lord Wallace of Tankerness: My Lords, I am grateful to both the noble Baroness, Lady Wheeler, and the noble Earl, Lord Howe, for their comments on this amendment, and in particular for the noble Earl’s reassuring words and the wider clarification of the roles of the sponsor body and the delivery authority in these matters. As he rightly said, the timeline for progress, decant and the likely completion is of interest not just to Members but to the wider public. What he has put on the record today is very satisfactory indeed and we look forward with interest to watching progress. With these words, I seek leave to withdraw my amendment.
Amendment 8 withdrawn.
Sitting suspended.

Banking: Standards and Reform
 - Question for Short Debate

Bishop of St Albans: To ask Her Majesty’s Government what assessment they have made of the implementation of the recommendations of the Parliamentary Commission on Banking Standards and the opportunities for further banking reform.

Bishop of St Albans: My Lords, I add my welcome to the noble Lord, Lord Bethell, in his new role and I look forward to working with him.
I begin by acknowledging that the banks have an important role in our society today. They do many good things—they employ more than 1 million people and pay more than £60 billion in tax annually—but, despite the many good things they do, we are also aware of the history of recent years. We are now 11 years on from the financial crash and six years on from the publication of the report by the Parliamentary Commission on Banking Standards, and it is almost three years to the day since I last secured a debate on this topic.
As I did then, I approach this subject with a certain reticence. I do not approach it as a banker and I do not pretend to understand all the technical issues; I am going to leave those to others speaking in this debate who have far more knowledge, insight and experience than I do. I sought this debate because I have witnessed first-hand some of the long-term costs of the banking crisis in communities across Bedfordshire and Hertfordshire which lie within my diocese. I have heard more than one banker say, “We’ve moved on from the crisis. We’re in a new era”. Some bankers may think that we have moved on—indeed, they may have moved on—but the effects are still being felt in many of our poorer communities, especially in the north of England and some parts of Scotland and Wales. We owe it to those who are still feeling the effects of the crisis to remember the damning indictment of the banking crisis in Changing Banking for Good:
“Banks in the UK have failed in many respects. They have failed taxpayers, who had to bail out a number of banks including some major institutions, with a cash outlay peaking at £133 billion, equivalent to more than £2,000 for every person in the UK. They have failed many retail customers, with widespread product mis-selling. They have failed their own shareholders, by delivering poor long-term returns and destroying shareholder value. They have failed in their basic function to finance economic growth, with businesses unable to obtain the loans that they need at an acceptable price”.
This was a classic case of an industry which presumed it had the right to privatise profits and nationalise losses. Since the report was published six years ago many of its recommendations have been implemented, but others have been dropped or watered down.
As we stand on the brink of Brexit, I know there are many people who will see it as an opportunity further to weaken regulation of the banking industry. I therefore believe there is an even greater need for us to explore what progress has really been made and, in particular, how we can know whether the necessary changes in culture have really been embedded across the industry. Culture is the last aspect of any organisation to change, and that is particularly true when it comes to the culture around the three most powerful of human motivations, usually summarised as money, sex and power.
With regard to money, the Christian scriptures are quite clear: the love of money is the root of all evil. In other words, money itself is neutral, but when money becomes the focus of our lives and our aspirations, we are entering dangerous territory. It is not just scripture which testifies to this. The seminal book by Professor  Michael Sandel, What Money Can’t Buy: The Moral Limits of Markets, should be required reading for all who work in finance. As the most reverend Primate the Archbishop of Canterbury has said, financial services are called that for a reason: they are here to serve. They are here to enable individuals, communities and nations to flourish and thrive, but they are not an end in themselves. This resonates with the social teaching encyclicals from the Roman Catholic Church, which argue that the maximisation of shareholder value should never be the only aim of any company.
It is because money should be a servant not a master that the Church of England has been actively involved in setting up credit unions. One in my city of St Albans visits schools regularly to encourage financial literacy from the very earliest stages. As a church, we run debt advice centres all around the country. At a national and international level, the Church of England’s Ethical Investment Advisory Group has helped the Church Commissioners, the Church of England Pensions Board and the CBF Church of England Funds to engage with large companies on levels of remuneration. Nevertheless, we cannot leave it to all sorts of people and charities to deal with this alone: there is still a vital role for government to play if we are to ensure that we do not have another financial crisis. We need to ensure that we have the right laws and regulations in place to protect the most vulnerable and we should not be complacent. As recently as last January, Mark Carney, Governor of the Bank of England, warned about the high levels of leveraged loans, suggesting that they are at the same level as in 2008.
I want to ask the Minister four questions—I have given him warning of these. First, what evidence do Her Majesty’s Government have to show that the industry has indeed changed and is now regulating itself effectively? Secondly, are the rules around whistleblowing working? Will he give us the number of cases over each of the past five years? Thirdly, how can we be assured that there has, in fact, been a change in the culture of banks? How do we get hold of that most difficult and nebulous of topics? Fourthly and finally, what is the evidence that banking executives and managers are actually being held to account for their decisions? I am aware that a number of noble Lords have huge experience in this area, and I thank them for agreeing to speak in this short debate.
I look forward, as I did three years ago, to learning a great deal. I hope that this debate might be a modest contribution as we think about this vital area for our nation and our economy and look to the future during these turbulent times.

Baroness Bowles of Berkhamsted: My Lords, I thank the right reverend Prelate for securing this debate and I welcome the Minister, the noble Lord, Lord Bethell, to his new post. I pay tribute to his predecessor, the noble Lord, Lord Young.
Improving behaviour and culture in banks is a work in progress, not a work completed. Following the FCA report into GRG, which we debated shortly before the recess, we are left with doubt about whether the tools are available to catch bad behaviour. Notably, that report says:
“We cannot say whether we would have been able to bring successful cases against RBS senior management had the SM&CR been in force”.
Andrew Bailey has said since that he believes the behaviour would be covered by the senior managers regime, but in any event, it would have to fall within the perimeter of what was defined as being under the senior managers’ control. The FCA report emphasised that many more things are going on in financial services than are regulated, and this unregulated activity, which includes corporate lending, is beyond the reach of regulatory discipline unless it strays into other matters or offences, such as fraud.
Some things are deliberately left outside regulation. The argument, which is the gist of what the noble Lord, Lord Young, said when he wrote to me after the GRG debate, is that regulation might reduce availability of the relevant service, such as lending to SMEs. I think it is time, though, to have a longer and better look at that general supposition, in particular with regard to the treatment of SMEs by banks. Right now, we are left with the situation that heavily regulated entities—the banks—carry out unregulated activity but nevertheless benefit from some sense of trust derived from being a regulated entity. After all, one expects a bank to behave better than a loan shark. I went to see the FCA during the recess and Andrew Bailey took pains to state again that because not everything done by banks and financial services firms was within the regulatory perimeter, they had little power. He went further, suggesting that Parliament had not had a debate looking at the regulatory perimeter.
I challenge that to some extent, in that there have been many debates such as this one in your Lordships’ Chamber and others in the Commons. There have also been proposals backed by APPGs, such as that on fair business banking, making specific recommendations and decrying the powerlessness that our regulators have or seem to have.
However, the point I make now is that we need effective generic offences not bound up in specific regulation and flexible enough to catch twists and turns. We previously thought that that was the fit-and-proper regime, but that has failed on GRG, which falls under it, because the relevant event took place before the senior management regime came into force. Now we think that it may be the senior managers regime, but there is doubt. The object of that regime—I quote from the 14 November 2014 statement by some of the parliamentary commissioners—was to,
“make clear where senior individual responsibility lay for each aspect of a firm”.
“Each aspect” should include unregulated activity, but it is extremely likely that the context has been narrowed through rules and definitions.
I understand completely why industry seeks to limit risk, but the more detail that there is in rules, the less a measure is fit to catch new and unknown developments. Risk is the other side of the coin to using conscience, and conscience and judgment are what we need from senior executives—in fact, I think that is what they are really paid for.
I would like to see a legal analysis of how wide the senior managers regime really is, looking at true life examples, including all the rules and assessment of the managers’ responsibilities. Have the Government done anything like that as part of the monitoring of the implementation of banking reforms?
In the previous GRG debate, I referenced the Australian offence of unconscionable conduct in commerce—a useful generic offence, which I still recommend. I also discussed it with the FCA. It told me that in the context of GRG and corporate lending in general, contract law prevailed and, one-sided though contracts admittedly were, our courts would uphold them, so it was not unconscionable conduct to enforce them. With such an approach to contracts, it is hard to see that the senior managers regime would make any difference without specific guidance—I think some might be under way—but, even then, I wonder how much clout it would have.
This leads me to the conclusion that while we allow or, worse, expect commercial contracts to be unfairly one-sided between powerful and supplicant parties, events that look like oppression to the reasonable-minded person will continue. I see no hope in creating the kind of conscience culture that we seek in business and banking until we address the issue of contracts. If heavily one-sided contracts between large and small entities are the business norm “just because they can”, it has already set the tone and lowered the bar for decent behaviour.
I know that English law is considered an asset, including for the predictability of interpreting contracts, but that does not mean that nothing can be done. Why should “fair and reasonable” be only for consumers? We know what happens. Contracts to SMEs are “take it or leave it”, frequently leaving SMEs in the position of accepting terms that leave them vulnerable—for example, it being simply impossible to organise alternative refinancing on the notice timetables included in the contract. In my own business I often chose the “leave it” option but not everybody has the resources to do that.
Some time ago—I think it was in 2002—in Law Commission Consultation Paper No. 166, which is also Scottish Law Commission Discussion Paper No. 119, there were recommended changes to unfair terms in contracts, which I believe have still not been taken up. They included more protections in business-to-business contracts. The paper said that,
“it is our provisional conclusion that even though the changes we suggest would not be major, they would deal with types of unfair term that have caused very real problems to a number of businesses”.
It is time to dust off those proposals and look at them again alongside the other suggestions that have come forward from various think tanks and others in the light of recent banking scandals. English law does not need to guard the bully and the powerful to maintain its success.

Baroness Coussins: My Lords, I too thank the right reverend Prelate the Bishop of St Albans and congratulate him on securing this debate. I declare my  interest as president of the Money Advice Trust—the charity that runs National Debtline and Business Debtline, which between them help hundreds of thousands of people a year to tackle their debt problems.
We last debated this subject three years ago—almost to the day, I think—and it is right that we return periodically to the parliamentary commission’s work and measure the progress that has been made against its recommendations. Most of these recommendations focused on issues of governance, professional standards, structure and regulation. Nevertheless, now, as then, I believe that it is also important to make the point that no debate on banking standards can be complete without reference to the individual consumer and the need to protect the consumer interest. There are two broad aspects to that: first, ensuring that consumers are able to access financial services and, secondly, ensuring that they are treated fairly when they do, no matter what their personal circumstances are. I should like to say a few words on each of those two aspects.
The first is access to services and, more broadly, improving financial inclusion. The parliamentary commission focused its recommendations in this area on the issue of basic bank accounts and was influential in their introduction in 2016, since when they have certainly made a difference. However, challenges remain in ensuring that they fulfil their full potential as a tool to address financial exclusion. For example, it is widely acknowledged that awareness of basic bank accounts among the people whom they are intended to benefit is not high enough. I believe that the banking industry could and should do more to promote basic bank accounts to financially excluded groups. The new Money and Pensions Service should surely have an important role to play here too, and I wonder whether the Minister, whom I welcome to his new role, will comment on that when he replies.
Another challenge concerns the identification requirements for opening a basic bank account. These of course are understandable, given the need to protect against fraud, but they have the unintended consequence of presenting a barrier for people who do not have certain means of identification, such as a passport or driving licence. Alternatives can be used, such as letters from government departments, but the option to use these is not well understood and is another area that should be addressed.
Nevertheless, fortunately, the broader financial inclusion agenda has risen in prominence significantly since our last debate three years ago, thanks in very large part to the work of the noble Baroness, Lady Tyler of Enfield, and her colleagues on the House of Lords Financial Exclusion Committee. Their report was influential in the establishment of the Financial Inclusion Policy Forum, which brings together different government departments to examine these issues and now also includes some key external members—among them, I am pleased to say, Joanna Elson, the chief executive of the Money Advice Trust. But we remain some way off the tangible, comprehensive and joined-up approach to financial inclusion across government that is required. Does the Minister agree with that and if so, what plans do Her Majesty’s Government have to improve the situation?
My second main point is on the need to ensure that customers are treated fairly when they access banking services, no matter what their personal circumstances. This is essential if we are to rebuild trust in the banking industry. In our debate three years ago, I noted the significant progress that had by then been made in improving the treatment of people in vulnerable circumstances; I am pleased to say that this has continued in the period since.
The Financial Conduct Authority’s proposed new vulnerability guidance, which is currently out for consultation, is a welcome sign that the regulator is continuing to apply pressure on banks and other financial services firms to improve. There are signs that this continued pressure is delivering results across the industry. The Money Advice Trust has now worked with more than 220 firms and trained more than 19,000 frontline staff to help them identify and support vulnerable customers. The trust has also recently partnered with UK Finance to run a vulnerability academy for senior policymakers in banks and other financial services firms. These are sure signs of the industry’s progress. Discussions within the industry are focused increasingly on product design; that is, making sure that banking products and services are being designed in the first place with the needs and circumstances of vulnerable customers in mind. This is a welcome and critically important development, which needs to be pursued vigorously.
In conclusion, while the work of the parliamentary commission largely focused on the macro level—that is, structural problems it observed in the sector—we must never lose sight of the consumer in our debates on how this industry’s essential services are provided.

Bishop of Birmingham: My Lords, I am grateful to my right reverend friend for leading this debate and I welcome the Minister to his new role. I want to focus on the recommendations in the original report—the references in paragraph 138 of the summary, volume 1—which looked at culture change. The response of the banking industry to that challenge came through a report produced by Sir Richard Lambert, which said that if the banks didn’t face up to this, there will be further intervention, regulation and direction. As a result, the UK Banking Standards Board was set up in 2015. I declare my interests in that I am a founder member of that board and also part of the ad hoc Financial Exclusion Committee which has been referred to already.
The aims of the Banking Standards Board are, first, to provide tools and voluntary interventions which are available to members of the board—there are over 31—for assessing different sizes of banks, building societies and other financial institutions, so that they can understand how culture change is going, if it is going at all. Secondly, there are the important elements of supporting regulation responses and how to perform in relation to the regulations. Thirdly, the aim of the board is to strengthen and encourage trustworthiness—a word that has already been referred to—in an industry that sorely lacks it.
My remarks are about soft power rather than the hard power architecture required for the banking industry, which must go alongside the business, legal and ethical demands that frame any healthy operation or organisation. What about the annual assessment? It sounds like box ticking, but that has not been our experience. The nine areas of assessment are very obvious. How would noble Lords feel, in their organisations—just as I would in mine—about being assessed annually, on competence, reliability, responsiveness, personal organisation and resilience, accountability, openness, respect, honesty and shared purpose? In a sophisticated analysis that is kept privately to each bank but then anonymised across the industry, leaders of banks and their staff can see how they are doing in particular areas of the industry that matter in terms of their internal and external organisational culture. It is, if you like, a mirror of honesty put up in front of the organisation.
Then of course there is the need for regulation support. We have already heard from the noble Baroness, Lady Bowles, about the senior management certification regime. The Banking Standards Board has today published its fourth good practice guidance on regulatory references, based on the principles of proportionality, fairness and consistency, in order to try to make real some of the theory and some of the things that we know are needed in an industry that has struggled in these areas. This is to try to help a profession to renew not only its confidence in itself and public confidence in it but also its sense of pride—the sense that it is possible to do well in an industry whose reputation has been ruined by the last few years, particularly 10 years ago.
The third issue, which has already been mentioned, particularly by the noble Baroness, Lady Coussins, is trustworthiness. This is something that is not legislated for or bought—it is given to an organisation. As was illustrated by my right reverend friend, there is still a long way to go to restore confidence in what is called the banking industry’s social licence to operate; it is still under suspicion. We have moved from a close study of markets that need to work efficiently and effectively for the good of the consumer as well as for business, and we have looked at transparency and ethics, but now there is the heavy work of trustworthiness in relationships, from the biggest picture—we have talked about macroeconomics and the social good of banks—right the way down to the detail of a functioning, profitable and, perhaps we might say today, unsubsidised business.
The values that underpin a healthy society and healthy banks are easily ignored and eroded. The noble Lord, Lord Skidelsky, said very succinctly:
“The capture of culture by the market was made possible by the disappearance of ways of life and habits of thought which had sustained traditional culture. Culture became a market brand dreamt up by entrepreneurs, advertisers and satirists”.
Noble Lords will get the point that the erosion of our ordinary ways of doing things became extreme in the industry, and in some respects it still is.
We have just been discussing the renewal of this building. I am worried that in the refurbishment we might erode our own labels in the Sovereign’s Robing Room that read “Courtesy”, “Religion”, “Generosity”, “Hospitality” and ”Mercy”. How often are we able to trip those off our tongue? They were put up there in a  vision of a culture that worked for the betterment of others and for the development of an economy that actually worked.
I have some questions for the Minister. Will Her Majesty’s Government affirm and encourage the soft-power work of the Banking Standards Board alongside the important work of regulations and law? Will they also see that this is not only a matter for one industry singled out but for all of us in terms of how we see ourselves, how we operate and how we understand our wider responsibilities beyond the project or responsibility that we actually have?
I would like to ask another question, especially at this time of introspective and very tense political life. When we have calmed down a bit in the weeks ahead, will Her Majesty’s Government support and encourage a wider debate in which we can think of the wider financial context in which the banking industry sits and the wider needs of society, to rebuild trustworthiness in not just the City but our political and social institutions? As we have already heard, this is about joining up bits of our society that are profoundly fragmented. We do this when we take time, like this, to think more widely and see how we personally are responsible for the things that happen. It gives us the potential to join up law, consumers, exclusion and trustworthiness.
Will that also be part of a courageous intervention into how the objectives of businesses and banks are set? Will responsible investment touch the way that banks operate? Can we see a time when, as society is already telling us, it is not just the bottom line that matters, but how the industry, through its investments, affects climate change, or takes responsibility for artificial intelligence? These big areas are difficult to legislate but are fundamental to what people in our society care about. Banks have enormous power and influence in those areas.
I will finish with the words of someone who has already been quoted, the current Governor of the Bank of England. He said that banks must recognise that:
“Only exemplary behaviour can confer … social licence”,
to global financial capitalism. He also stated, more fundamentally:
“Integrity cannot be legislated, and it certainly cannot be bought”.
Only a perspective which takes into account the wider implications of actions can guide proper behaviour.

Lord Gadhia: My Lords, I welcome the opportunity provided by the right reverend Prelate to take stock of progress since the Parliamentary Commission on Banking Standards first reported over six years ago. I also join other noble Lords in welcoming the noble Lord, Lord Bethell, to the Government Front Bench, and I look forward to his debut at the Dispatch Box.
Since the PCBS made its recommendations, progress is perceived to have been slow, as the Banking Standards Board itself has noted. There also remain gaps in holding banks to account, especially in the redress process for SME customers. However, it would be  wrong to conclude that significant change is not under way. The Financial Stability Board has commended the UK for its successful transition to a new regulatory regime, and the IMF has welcomed the UK’s more resilient system. However, it is fair to say that individual banks, and the financial system as a whole, have thus far benefited more from structural safeguards, such as strengthened capital ratios and better resolution processes, than from behavioural change. Those involved in major organisational transformation will appreciate the huge forces of inertia that need to be overcome.
It is not surprising, therefore, that the process of internalising externally imposed regulation is proving slow. This also serves to highlight that, in addressing “too big to fail”, we are uncovering the associated challenges of “too big to manage” and “too big to regulate”. The real litmus tests of the reforms undertaken since the global financial crisis are whether our financial system is genuinely safer from contagion, whether our regulators are fit for purpose and, ultimately, whether consumers are better off. The noble Baroness, Lady Coussins, provided a powerful reminder of the key consumer issues.
As well as testing the outcomes, we need to monitor the implementation of the new rules and regulations—for example, the number of senior managers being held to account under the new certification regime, the number of staff disciplined for breach of conduct rules, or the number of cases where banks exercise their right to claw back remuneration. It would also be helpful to demonstrate, in a transparent fashion, how banks and regulators are using their new powers. So far, the most visible aspect of regulatory enforcement has come in the form of fines. While these are necessary we must guard against the unintended consequences of creating a culture that accepts such penalties as a cost of doing business, so it is encouraging that shareholders of financial institutions—especially those that take a longer-term investment perspective—have come to appreciate the impact of culture and the financial, reputational and existential risks of poor conduct on the value of their holdings.
In addition, there is a case for reviewing how the various strands of reform and the setting of standards interact with each other and whether they should be streamlined. For example, we have a voluntary Lending Standards Board for consumer and commercial banking and, more recently, a Fixed Income, Currencies and Commodities Markets Standards Board for wholesale banking. While both have different functions from the Banking Standards Board, which focuses on behaviour and competence, it is ultimately difficult to separate the how from the what. Moreover, none of these bodies has any statutory force or enforcement teeth—something which members of the Treasury Select Committee have rightly highlighted and its new chair may wish to examine. We should also not lose sight of the quest for better regulation that is proportionate and effective, rather than simply more regulation through increasingly proscriptive rules. I would much rather we have fewer rules rigorously enforced than the current situation, where many firms believe they are swimming in overlapping regulations but few are perceived to be held properly to account.
We also need to be conscious of trying to solve the last crisis but failing to spot the next one. The Financial Policy Committee now exists to help manage macroprudential risks, but we must also consider the changing shape of finance. I commend the recent report Future of Finance, commissioned by Mark Carney and authored by Huw van Steenis. It highlights the rapid shift towards digitally enabled services and firms. This innovation will bring new risks, as well as new sources of competition. Indeed, the PCBS recognised the vital role of more competitive and better-functioning markets as part of its core recommendations.
This leads to my final point: some advice for our new Chancellor. Once tomorrow’s spending review is out of the way, the other big decision occupying his in-tray is the choice of Bank of England Governor and renewal of the annual remit letters. I urge him to use the opportunity of a new incumbent in Threadneedle Street with a fresh start to set a triple mandate: price stability remaining as the primary objective, but with secondary objectives of economic growth and competitiveness of the financial sector. I use this latter phrase deliberately, as distinct from competition, to reinforce the need for choice and innovation in meeting the needs of customers. With such an explicit mandate, the new governor would be well placed to complete the unfinished business of the 2013 parliamentary commission and address the challenges of the future, as well as the past.

Baroness Kramer: My Lords, I will speak next because there is an error on the Order Paper; the noble Lord, Lord Davies, will speak after me. I do not want to confuse anybody. Let me use this opportunity to welcome the noble Lord, Lord Bethell. I hope he will not mind me saying how much I will miss the noble Lord, Lord Young. He is one of the only people I know who could make a finance debate hilariously funny, as well as making very incisive comments and speeches. The new Minister has quite a challenge to fill those shoes—but I am sure he will, very ably.
I was privileged to be a member of the Parliamentary Commission on Banking Standards, which was chaired by Andrew Tyrie—now the noble Lord, Lord Tyrie. For two years it was an extraordinary experience to walk into evidence sessions where, at the table, a master of the universe would explain quite clearly why they had absolutely no knowledge of the failures in their own institutions, which were clearly far too big and too complex to manage. We all came to the conclusion that they had been advised to plead incompetence as the alternative to pleading guilty. I find it quite extraordinary that most of those we listened to have gone on to further success in their careers. As far as I can see, this is not an industry that has set real demands for competence on its senior management.
The title of the report by the PCBS was Changing Banking for Good. That is incredibly tough to do, but it reflects the critical importance of the dramatic change that we need to achieve, the weaknesses in both the standards and culture that underpinned the crash in 2008, and many of the other abuses within the financial services industry. I think the follow-on from  the PCBS report—I have picked this up from many who have spoken today—is rather a curate’s egg; it has been good in places.
I say to the noble Baroness, Lady Coussins, that one of the areas it has handled best has been vulnerable people. We now have caps and other constraints on high-cost credit, a breathing space in debt management and severe restrictions on cold calling. However, I agree with her that the core issue of financial inclusion is no better today than when the report was made. It is frustrating that the banks are required to provide basic accounts but do so with great reluctance and therefore, in effect, quite badly. We had the opportunity to make it a condition of the banking licence that major banks should either provide proper services to the financially excluded or support an institution that could do that—which could target those individuals. That has been neglected and it has to be followed up.
That is a real failure. The regulator says, “We know there is a huge gap and that no one is providing services to much of this community, but it is not our job to fill it”. Well, somebody needs to take responsibility for that. I do not think that the Treasury is very well placed to focus on it. The role should be handed to the regulator, because banks fear the regulator, as do other institutions that can follow. We have seen the rise of challenger banks, peer to peer lenders and open banking, which is all entirely positive, and a few of those are starting to reach meaningful size—but, again, they are not tackling that challenging area.
I agree with the noble Lord, Lord Gadhia, that financial stability is an area where we have seen some significant change, thanks to a tough PRA backed by the Bank of England. The ring-fencing of high street banking from investment banking is still a work in progress, but it is happening to stop the contagion of speculation. Capital requirements are much tougher, and there are bail-in bonds and central counterparties to provide clarity within the field of derivatives—although that has risks in and of itself. There will be a test, because at some point we will run into a recession and that will have financial consequences. So we had better get this right. But, like the noble Lord, Lord Gadhia, I think that these structural areas have probably been the greatest success.
Frankly, what worries me most is the underlying problem of culture: the tone from the top, from the senior managers and regulators. This is where we have seen the least change. I hope that the right reverend Prelate the Bishop of Birmingham will not be offended when I say that while the “softly, softly” approach of the Banking Standards Board is built into its DNA, in this industry it is not an adequate response. This industry must be taken by the scruff of the neck; that is the only language it really understands. I was disappointed when the Banking Standards Board decided that it would not publish the annual assessments of banks’ performances. Initially, that was going to go into the public arena; it is now collated and anonymised. It means that civil society can no longer pinpoint on a bank and say, “Actually, that’s not right”, or, “You said you’d do this. Why aren’t you doing it  within our community?” It is crucial that the information goes into the public arena. I would also like to see that board have genuine teeth.
I also want to see a regulator with some real teeth. No one went to jail for the 2008 financial crisis. There has been no enforcement action against any individual in a big bank for PPI. A few people went to prison for that, but they were members of very small institutions—I think one was the director of the House of Leather—and no individual has paid a significant price. For the failure of HBOS, only the corporate head, Peter Cummings, was fined and banned. He surely was not solely responsible for an outrageous and deliberate mismanagement of a major banking institution.
For the abuse of LIBOR reporting, which corrupted the whole finance industry, four City traders have gone to prison. The senior managers who both knew about it and benefited from it have never had to answer. My noble friend Lady Bowles talked clearly about RBS’s abuse of small businesses by seizing their assets and treating them as a mechanism for creating income for the bank rather than managing them in the responsible way that they should have within a banking relationship.
One of the saddest aspects of this whole process is the way in which the regulator has tackled senior management. The senior managers regime sounds strong and positive. It has been in place for three years, but it has not been used. That is a real failure. We have had the case of Jes Staley, the head of Barclays, who abused the whistleblowing process within the bank, even hiring private investigators to try to find the identity of a whistleblower. He basically got a small fine from the FCA, when most people, including the rest of the industry, thought that he would not only lose his job but be told that he could no longer function within the industry. The senior management regime is a long way from proving itself and now has a reputation for being tick-box. I talk to senior bankers who were very afraid when the regime was first brought in and who now feel very relieved that it will not check the way in which they do business.
The PCBS had a recommendation enacted in law that, when a bank fails, the presumption of guilt is reversed on a civil basis to assume that its senior management knew what was going wrong within the organisation unless they can demonstrate that they did not. It came about because, when regulators go in to try to enforce against these banks, they find that no paper or email trail ever leads to senior management; they have basically been protected. That measure has since been reversed and it has taken away the strongest weapon that regulators had.
I join others in saying that we need to look again at whether the regulators are fit for purpose or should be given greater powers. I agree completely with my colleague that the regulatory perimeter is nonsense. We either regulate an institution or we do not; we cannot just say that we regulate bits of an institution and ignore the rest. No other country does it; we are unique in having this regulatory perimeter that means that organisations are a mix of regulated and unregulated activity, and frankly I do not think that it has served any of us well.
I thank the right reverend Prelate the Bishop of St Albans for bringing this issue once again to our attention. I hope that he will continue to do it, because it will be an ongoing debate.

Lord Davies of Oldham: My Lords, I, too, congratulate the right reverend Prelate the Bishop of St Albans on introducing this debate, which he did by emphasising the most challenging aspect of the world of finance that the nation has to face; that is, a culture that the past decade has revealed to be most difficult to defend. I refer not just to the extraordinary issues surrounding the financial crash in 2007-08 but, subsequent to that, a number of instances where banking behaviour has been far from publicly acceptable.
I welcome the noble Lord, Lord Bethell, to this debate and look forward to his contribution. The number of Ministers that I have had as opposing forces on the Front Bench is almost into double figures. Each one has made a significant contribution, but, like other Members today, I want particularly to thank the noble Lord, Lord Young, for his all-too-brief period as Treasury spokesman. He identified the issues well, defended the Government’s position—often defending the indefensible—and performed with such wit and insight that we all appreciated his contributions.
This is a challenging debate about a very difficult area. The Government have to face up to the failures in the financial system and in the City. That was clearly identified by the noble Baroness, Lady Bowles, who went into considerable detail on just what needs to be corrected. The City of course will be expected by the governing party to provide a fair degree of financial support for the Conservative Party in the general election whenever that occurs, so we have to assume that nothing is imminent as far as a response to the banking problems is concerned; nor is that possible in the long run without a definitive change in government attitude, which has not been apparent during the past decade. We have all seen those instances where banks have been guilty of conduct which is quite indefensible.
After the great crash and the staggeringly expensive bailout by taxpayers of several of our leading banks, the public clearly expected change in both action and —as both right reverend Prelates drew to our attention—culture in the financial system, but they have lost trust not only in the capacity for effective action in many aspects of the financial system but in its morality, wondering whether it is not devoid of morality altogether, other than that of increasing profits for the few.
There has been only disappointment in the decade during which the Conservatives and, before that, the coalition have been in power. The banking commission, which reported in 2013, identified some clear priorities for reform. One substantial demand was for the establishment of a public inquiry, about which we have heard precious little since. The Government have effectively ignored that demand and made only limited responses to the scandal of the Royal Bank of Scotland, which did such damage to small and medium-sized enterprises. Nor was prompt and effective action taken during the HBOS Reading scandal.
Toxic culture is the background to these kinds of activities by major banks. It has persisted and allowed systemic failure to occur. Even Conservative voices in the House of Commons have expressed the view that the City seems to be devoid in many quarters of honour and decency. There is enough evidence for us all to be worried about that. It is of course the backdrop to the shameful episode in British banking which we have seen over the last decade and a half and which the right reverend Prelate the Bishop of Birmingham described so accurately in his opening speech.
It seems that in the past decade, the banking sector has learned little from the 2007-08 financial crash. The noble Baroness, Lady Coussins, identified what it could learn, but there has not been much apparent action on its part. I agree with her that we need to educate our public to improve their defences against action by financial elements which may be seeking on occasion to take advantage of them, but that is quite a long-term problem.
The public have also been shocked by the banks’ reduction of significant services, closing branches and ATMs so that many people in rural areas are many miles from their nearest branch and cannot take advantage of the services which ought to be available to them. On the issue of banking failures, the remedy, as demonstrated by the difficulties of small businesses, is to go to court, but the resources available to the mighty banks seem to triumph over that which a small enterprise can command. There is palpably a need for greater balance in this area.
Today’s debate focuses not only on bank failures but on the wider financial system. One extraordinary thing in recent years has been that the four big accounting firms, which take such a high percentage of the business in finance, are often criticised for failure. It is extraordinary that Deloitte, for instance, having been criticised for its part in inadequate accountancy in crucial areas, is handing out million-pound bonuses to its partners this year—colossal rewards in circumstances where Deloitte has in fact been failing.
One significant proposal of the commission was to set up a public inquiry. My party is fully committed to this proposal and believes the public demand that corruption and immoral practices in the industry should be fully exposed. We have to change the culture which underpins action in the City. This will help to improve not just culture but governance, and will perhaps bring some morality to the levels of remuneration in the industry. We have called on the Government to act and have pledged to do so when we form the next Government, whenever that might be.

Lord Bethell: My Lords, I join all those who have paid tribute to my noble friend Lord Young, into whose massive shoes I will attempt to step. I cannot promise to be as witty, charming and demure as he is, but I hope I can show some of his stamina on what is promising to be a long day. I also express great thanks to the right reverend Prelate the Bishop of St Albans for bringing this important debate to the House today. He is doing us all a great service by bringing back and reminding us about the recommendations of this  important parliamentary commission. He is also doing us a service by reminding us of the spiritual dimension of this debate. We thank him for both of those.
As we all know, the financial crisis was a serious blow to the UK economy and jobs in Britain, and we are living with the consequences. The noble Baroness, Lady Coussins, and the right reverend Prelate have spoken movingly on that. It is quite right that the Government took steps to respond to the problems that caused that crisis and to protect a world-beating industry that contributes a lot to the UK economy, to the Exchequer and to growth. We should not forget that positive contribution.
Some of the most important steps were structural reforms to the regulatory architecture, such as replacing the Financial Services Authority with the Financial Conduct Authority and the Prudential Regulation Authority, but it was rightly recognised that it was important to restore public trust in the sector. Many noble Lords, including the noble Baroness, Lady Coussins, and the right reverend Prelate, have spoken very movingly about that. That is why the Government appointed the Parliamentary Commission on Banking Standards, and it was right that the commission focused on professional standards and the culture of the UK banking sector. The noble Baroness, Lady Kramer, reminded us that the charge was Changing Banking for Good, which even now sounds like a very good mission.
I thank the members of the PCBS, some of whom have spoken today, such as the noble Baroness, Lady Kramer, for producing an exceptional report which clearly remains one of the best of its kind. It is clear from this important debate that its detailed and challenging work acted as a catalyst for a significant change in culture since 2013. I will talk a little about that.
The report encouraged both the Government and the industry to make the sector stronger and more resilient. Today I want to convince noble Lords that real progress is still being made, and I will outline some of the biggest steps of many taken to implement the recommendations made by the commission and provide evidence, as asked, about how we are working with the financial regulators, the consumer bodies and the industry to ensure that we have the safest and most prudent industry possible.
I will start with one of the key recommendations made by the PCBS: the need for more senior individual accountability in the sector. A critical measure was, as has been remarked, the new senior managers and certification regime, which was introduced in 2016. The SMCR ensures that individuals at all levels can be held to appropriate standards of conduct. I reassure the noble Baroness, Lady Bowles, in particular that it is changing culture and conduct in the financial services industry, with great impact. I will give three concrete examples, which I hope will not worry my noble friend Lord Gadhia too much as being simply scary. They will also in part satisfy the cry of the noble Baroness, Lady Kramer, for justice and harsh remedies.
Under the SMCR, the FCA and the PRA can levy fines on senior individuals. In 2018, four fines were imposed, totalling £785,000. Reckless misconduct by individuals is now a criminal offence, holding a maximum prison sentence of seven years—a daunting prospect.  Thirdly, new whistleblowing rules have led to the FCA preventing wrongdoing in 290 cases in 2018-19. The SMCR is still at an early stage of implementation. Culture takes time to change, but I do not recognise the suggestion that it is in any way failing to make an impact. Instead, we in government are greatly encouraged by the changes we have seen so far. Evidence suggests that firms believe the regime has created a culture of challenge and provided a safe environment for staff to speak up in.
I pay tribute to the work of the Banking Standards Board as part of this programme. The right reverend Prelate the Bishop of Birmingham put it very well: the board has already made a huge difference. It is part of a regime that is recognised internationally as a leading model for culture and conduct reform. I am proud to say that it is being replicated in countries such as Australia and Singapore.
Secondly, following the PCBS’s recommendations, the Government have listened to small and medium-sized enterprises, which are the backbone of the UK economy and were hit hard in the crisis. Let me share some impressive examples with noble Lords. We supported the FCA in extending the remit of the Financial Ombudsman Service to ensure that more than 99% of SMEs could better access protection. Not only will this mean that SMEs will find it easier to obtain redress if they need to; on the point made by the noble Baroness, Lady Bowles, it will also give the FCA far greater visibility into any potential bad behaviour that may arise in future.
With voluntary commitments, such as the standards of lending practice, the Government believe that the industry has changed significantly since the challenges of the financial crisis. We have also worked with regulators in industry to make it easier for firms to access the finance that they need, such as the commercial credit data sharing system, and, in 2016, we launched the bank referral scheme, which has helped 1,700 firms that had been rejected for finance by their main bank. I believe that these measures are clear evidence that SMEs remain at the heart of the Government’s economic plans; we will ensure that they have access to the finance and protections that they need.
In response to the point made by the noble Baroness, Lady Bowles, about RBS’s GRG and the question of the FCA’s tools relating to unregulated activities, particularly SME lending, that is why the Government were supportive of the recent expansion of eligibility for the Financial Ombudsman Service and the banking industry’s commitment to establishing a voluntary dispute resolution service.
Thirdly, the PCBS highlighted that the banking sector was dominated for many years by a small number of very large firms and that there was, therefore, a competition problem. The Government responded to this through the introduction of the current account switch service in 2013; we have made it much easier for consumers to switch banks when they see a better deal. As of January this year, over 5.3 million customers have switched. This fresh competition has helped to contribute to the growth of a new breed of challenger bank, such as Monzo and Starling, which is changing the way that consumers access banking.
The noble Baroness, Lady Coussins, asked what we are doing to promote financial inclusion. The Government believe that financial inclusion is vital and have taken action on this, for example by establishing the Fair4All Finance scheme to deliver £55 million from dormant assets to financial inclusion initiatives. I assure noble Lords that competition and fairness are both firmly at the heart of the regulatory system, with the PRA and the FCA charged with ensuring effective competition in the interests of consumers.
The noble Baroness, Lady Coussins, also raised the issue of basic bank accounts. The noble Baroness, Lady Kramer, reminded us that the nine largest personal bank account providers in the UK are legally required to offer basic bank accounts for those who do not have an account or are not eligible for one, but I am not sure whether it is within the scope of a financial regulator to deliver everything that is necessary in this area. I wonder whether that should be an alternative area of policy for discussion.
Fourthly, we have worked hard to protect the core functions of retail banking that are vital to the ordinary lives of British citizens. The Independent Commission on Banking’s important recommendations in 2011 included the suggestion of ring-fencing. In 2013, the PCBS wanted us to go further to ensure that the ring-fence stands the test of time. That is why we granted the PRA powers to restructure banking groups that do not comply with the essential elements of ring-fencing, known as the electrification powers. This tough regime protects customers and the day-to-day banking services that they rely on from unrelated risks elsewhere. The regime took effect on 1 January 2019 and has, I believe, strengthened the resilience of UK banks significantly.
It is right and proper that Parliament continues to hold the Government to account over the functioning of the financial services sector. Again, I thank the right reverend Prelate for bringing this debate to the House. I look forward to discussing the matter with him again in three years’ time. In the meantime, the Government are keeping a vigilant eye on the regulatory framework for financial services. Improvements could be made. The noble Lord, Lord Davies, mentioned HBOS, RBS and Deloitte—I could mention the London Capital & Finance incident—but I do not recognise the world that he describes. Instead, today’s debate has made it clear that major steps have been taken since the crisis to implement the PCBS’s recommendations, demonstrating its determination to ensure that the sector is better regulated and better serves the needs of consumers.

G7
 - Statement

Baroness Evans of Bowes Park: My Lords, with the leave of the House I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
“Mr Speaker, before I begin, I am sure that the whole House will join me in remembering that it is 80 years ago today that this country entered the Second  World War. Although it is of course true that the horror of that conflict surpasses all modern controversies, it is also true that this country still stands, as it did then, for democracy, the rule of law, and the fight against racial and religious hatred. I know that this House is united in defending those values here and around the world.
With permission, I will make a statement about the G7 summit in Biarritz. As I speak, vast tracts of the Amazon rainforest are on fire, free trade is in retreat, 130 million girls worldwide are not in education and our oceans are being foully polluted, so it has never been more important for a global Britain to use our voice as an agent of change and progress. It is only by exerting our influence at a global level, only by sticking up for our values and beliefs, that we can create the international context for Britain to prosper and to ensure that this is the greatest place on earth to live, work, start a family, open a business, trade and invest. So, at the G7, I made the case for free trade as an engine of prosperity and progress that has lifted billions out of poverty. Yet the reality is that trade as a share of the world economy has been stagnant for the last decade.
In the leaders’ declaration, the G7 unanimously endorsed ‘open and fair world trade’; we are determined to reform the World Trade Organization and to ‘simplify regulatory barriers’. Britain is on the verge of taking back control of our trade policy and restoring our independent seat in the WTO for the first time in 46 years. We could achieve even more in our trade with the United States by using the powers that we will regain to do a comprehensive free trade deal—a deal in which President Trump and I have agreed that the NHS will not be on the table. Unlike some in this House, I consider the United States a natural ally and a force for good in the world, and I recoil from the visceral, juvenile anti-Americanism that would do such profound damage to this country’s interests.
I know that the House will share my concern about the gravity of the situation in Hong Kong. As a nation with a deep belief in freedom of expression and assembly, we stand firm in upholding Hong Kong’s way of life, guaranteed by ‘one country, two systems’. I welcome the unwavering support of my G7 counterparts on this vital matter.
The UK is at the forefront of a new campaign to end the tragic loss of species around the world. We cannot bequeath a planet where the Sumatran tiger, the African elephant and entire ecosystems, such as the Great Barrier Reef, live in the shadow of destruction. So, I am delighted that the G7 accepted UK proposals for more ambitious targets to halt and reverse the loss of biodiversity. Britain is responsible for 2.6 million square miles of ocean—the fifth-largest maritime estate in the world. Our Blue Belt programme will ensure that marine protected areas encompass 1.5 million square miles and, at the G7, I announced a further £7 million for this vital effort. I also announced another £10 million to protect the rainforest in Brazil, where 41,000 fires have raged so far this year—more than twice as many as in the same period in 2018. Britain is bidding to host the UN’s 26th Climate Change Conference next year. If we succeed, we shall focus on solutions that harness the power of nature, including reforestation.
There is one measure that would address all those issues—and if it thinks it is a waste of money, that tells you all you need to know about the modern Labour Party. That is ensuring that every girl in the world receives the education that is her right. That would not only curb infant mortality, eradicate illiteracy and reduce population pressures; it would strike a blow for morality and justice. In Biarritz the G7 therefore endorsed the UK’s campaign for 12 years of quality education for every girl in the world. I announced £90 million of new funding so that 600,000 children in countries torn by conflict, where girls are twice as likely as boys to be out of the classroom, get the chance to go to school.
As well as my G7 colleagues, I was delighted to meet other leaders, including President Ramaphosa of South Africa, Prime Minister Modi of India and Prime Minister Morrison of Australia, who heroically masked his emotions in the face of the historic innings of Ben Stokes. In every conversation I was struck by the enthusiasm of my colleagues to strengthen their relations with this country, whether on trade, security and defence or science and technology.
I was also able to use the G7 to follow up my conversations in Berlin and Paris with Chancellor Merkel and President Macron on Brexit, as well with Prime Minister Conte, Prime Minister Sánchez and President Tusk. I have since spoken to Commission President Juncker and many other leaders. I was able to make clear to them all that everyone in this Government wants a deal—we do—but it is a reality that the House of Commons rejected the current withdrawal agreement three times. That is why I wrote to President Tusk on 19 August to set out our arguments why any future agreement must include the abolition of the anti-democratic backstop—which is, by the way, opposed on all sides.
We have been clear that we will need changes to the political declaration to clarify that our future relationship with the EU will be based on a free trade agreement and giving us full control over our regulations, our trade and our foreign and defence policy. This clarity has brought benefits. Far from jeopardising negotiations, it is making them more straightforward. I believe that in the last few weeks, the chances of a deal have risen. This week we are intensifying the pace of meetings in Brussels. Our European friends can see that we want an agreement, and they are beginning to reflect that reality in their response.
President Macron said—Mr Speaker, they do not want to hear the words of our counterparts across the channel; they do not want to hear about any progress we might be making; I think they are wilfully closing their ears to the reality that our friends and partners are increasingly seeing the possibilities of a deal. President Macron of France said that if there are things which, as part of what was negotiated by Michel Barnier, can be adapted and are in keeping with the two objectives I have just mentioned—stability in Ireland, which we all support, and the integrity of the single market—we should identify them in the coming months. Is that the negative spirit of the Opposition Benches? No, it is not.
Speaking in Berlin of possible alternatives to the backstop, Chancellor Merkel of Germany said: ‘Once we see and say this could be a possible outcome—this could be a possible arrangement—this backstop is a sort of placeholder which is no longer necessary’. No longer necessary—that is a positive spirit we are not, I am afraid, hearing echoed on the other side of the House today.
I believe there are indeed solutions. There are practical arrangements that we can find which avoid anyone putting infrastructure on the Irish border. These have been well worked out and involve measures such as trusted trader schemes, transit provisions, frontier zones, reduced bureaucracy for small and local traders, and many others. In particular we recognise that, for reasons of geography and economics, agri-food is increasingly managed on a common basis across the island of Ireland. We are ready to find ways forward that recognise this reality, provided they clearly enjoy the consent of all parties and institutions with an interest. We will be discussing all this with the EU shortly, and I will be discussing it with the Taoiseach, Leo Varadkar, when I see him in Dublin on Monday.
It is simply wrong to say we are not making progress. There is a lot to do in the coming days, but things are moving. A major reason for that is that everyone can see this Government are utterly determined to leave the EU on 31 October come what may, without a deal if necessary. That is why over the summer my right honourable friend the Chancellor of the Duchy of Lancaster has been leading the Government’s efforts, seven days a week, to accelerate our national preparations for this possibility. He will be making a Statement on that shortly.
My right honourable friend the Chancellor of the Exchequer has made all necessary funds available. We have already reached agreements with our partners to roll over deals worth around £89 billion of exports and imports. We have secured air services agreements around the world. We have increased the capacity of the Border Force, strengthened the resilience of our ports and our freight capacity and worked with meticulous detail to ensure the uninterrupted supply of critical goods, including medicines. We will be ready.
I returned from the G7 with real momentum in the Brexit discussions. I want to return from next month’s European Council in a similar way, with a deal that this House can debate, scrutinise and endorse in time for our departure on 31 October, but there is one step that would jeopardise all the progress that we have made at the G7 and around the capitals of Europe. That is if this House were to decide it was simply impossible for us to leave without a deal and to make that step illegal. That is what they want: to force us to beg for yet another pointless delay. If that happens, all the progress that we have been making will have been for nothing.
Yesterday a Bill was published that the leader of the Opposition has spent all summer working on. This is not a Bill in any normal sense of the word. It is without precedent in our history. It is a Bill that, if passed, would force me to go to Brussels and beg for an extension. It would force me to accept the terms offered. It would destroy any chance of negotiations  for a new deal. Indeed, it would enable our friends in Brussels to dictate the terms of the negotiation. That is what it does. There is only one way to describe this Bill: it is the Jeremy Corbyn surrender Bill. It means running up the white flag. I want to make it clear to everybody in this House: there are no circumstances in which I will ever accept anything like it. I will never surrender the control of our negotiations in the way the leader of the Opposition is demanding.
We promised the people we would get Brexit done. We promised to respect the result of the referendum and we must do so now. Enough is enough. The country wants this done and the referendum respected. We are negotiating a deal and, although I am confident of getting a deal, we will leave on 31 October in all circumstances. There will be no further pointless delay.
This House has never before voted to force the Prime Minister to surrender such a crucial decision to the discretion of our friends and neighbours overseas. This Bill would mean that, unless we agree to the terms of our friends and partners, they would be able to keep us in the EU for as long as they want and on their terms. I therefore urge this House to reject this Bill tonight so that we can get the right deal, deliver Brexit and take the country forward. I commend this Statement to the House”.

Baroness Smith of Basildon: My Lords, I am a bit puzzled, because I thought this was a Statement about the G7. If anything underlines the change of tone in government, it is the Statement we have just heard. As we go on, the noble Baroness may find some difficulty in having to repeat such Statements if the Prime Minister plays that way much longer. That sounded to me very much like a pitch to continue the bullying of MPs considering voting against him this evening. It sounded like a Prime Minister in election mode for an election he says he does not want. It was hardly statesmanlike; it was not prime ministerial. We wanted to hear about the G7 and got a rant from Boris Johnson about what he thinks about legislation before the House of Commons. It is inappropriate for this House.
The noble Baroness talks about the Bill being about Jeremy Corbyn, but the Bill she has referred to in repeating the Statement today actually has the signatures of two recent Conservative Cabinet Ministers on it. I wonder if we ought to consider whether these Statements should be repeated in the way they are.
I concur with the noble Baroness on one point, when she reflects that it is 80 years since we entered into the Second World War. It is worth reflecting on the sacrifices made by those engaged at home and in action abroad. It was the horror of that war that brought European countries together to engage and work. That was about not just trade but peace, values and co-operation. Today, those issues are more important than ever. I am sorry that was not reflected in anything we heard from the Dispatch Box today.
Shortly before the Prime Minister began his first performance—I think that is the right word for it—for world leaders at the G7 summit, he made a speech insisting that, on his watch, the UK would no longer retreat from the international stage. It begs the question:  how have we found ourselves in such a tragic state, in which all this Prime Minister can hope for is to maintain the diminished role on the world stage that nine years of Conservative Governments have left us with? During the weekend in Biarritz—probably not the normal kind of weekend that the Prime Minister spends in Biarritz—he displayed zero ambition to improve the UK’s standing in the world and completely failed to set out a vision of how we can use our influence and experience to promote peace and prosperity. While he may have set the bar spectacularly low, aiming only not to retreat further from the global stage, judging from his act at the G7 summit, it sounds like he will fail even in that lowly aim.
I turn first to the climate emergency and, as the noble Baroness referred to, the heartbreaking situation in the Amazon. We have all seen the shocking images of flames engulfing what President Macron referred to as the “world’s lungs”. The announcement of extra funding to tackle the climate emergency will always be welcome; we will never criticise additional funds to tackle this issue. But the Prime Minister’s £10 million is a paltry sum. I do not understand the Government’s pointed refusal to work with UK companies to ensure that they are not aiding and abetting the destruction of the Amazon. I hope the noble Baroness can give us an explanation. There is also no excuse for the Prime Minister’s reluctance to fully engage the UN Security Council and the international financial institutions to promote policies to tackle the wider emergency.
It is not just about money. The noble Lord, Lord Howell, is here, who has regularly spoken in your Lordships’ House about soft power. If utilised correctly by the Prime Minister, the UK’s influence can be worth far more to the global campaign than £10 million. If we understand the importance of implementing our ideals and ethics in our trade policy, we can do far more than play our part in tackling the climate emergency. I hope to hear something from the noble Baroness to explain the Prime Minister’s reluctance.
On trade, I hope that the role of the UK’s arms trade in fuelling the Yemeni conflict was not the reason the war did not feature heavily in the summit. The Red Cross informs us that hundreds have died during air strikes in recent days, and while the UK continues to supply arms to be used in the conflict, we can only assume that this dreadful bloodshed will continue. Can the noble Baroness tell us whether any world leaders made representations to the Prime Minister with regard to the UK’s role in this conflict?
On diplomacy and conflict prevention, as well as minimising any contribution that we have to international conflict, we should also use our influence and experience —our soft power—to eliminate the risk of conflict elsewhere. I would like to have heard how the Prime Minister attempted to use the summit for exactly that.
If we look towards Iran, it was useful that Iran’s Foreign Minister attended discussions at the summit, but did the Prime Minister make any attempt to meet Mr Zarif bilaterally? If he did, did he take the opportunity to raise the issue of Mrs Zaghari-Ratcliffe, who remains in custody in Iran? I would think that the Prime Minister would take a personal interest in that case, given the effect of his previous comments. The UK  should play a role in defusing the situation in Iran and moving to get the nuclear deal back on track, but there is nothing to suggest that the Prime Minister has any interest in doing this.
While the situation in Ukraine may not have featured heavily at the G7 summit, we have learned that Chancellor Merkel and President Macron will convene a summit with Russian and Ukrainian leaders. In the past, we could assume that the UK Prime Minister would play a role in promoting peace in the region. Can the noble Baroness tell us of any interest—I am not aware of any—the Prime Minister has shown? Will he be attending the upcoming summit with Chancellor Merkel and President Macron?
I want to say something about Hong Kong. The joint statement from leaders reaffirming the existence and importance of the Sino-British joint declaration of 1984 is very welcome. But given our historical connection and ties to the region, the Prime Minister should have used the summit to stand more firmly against the abuses taking place. Police brutality is unacceptable and must end. While the joint statement included a call for violence to be avoided, can the noble Baroness confirm whether the Prime Minister urged for any further text to be added?
I was slightly puzzled by the words on education, which were not in the circulated text, criticising the Labour Party with regard to international education for girls. That was clearly inserted either as an ad lib by the Prime Minister or after the text was circulated. To suggest in any way that the Labour Party has not consistently and for many years supported girls’ education across the world is incredible. Indeed, I had hoped that tribute would be paid to the work of Gordon and Sarah Brown who, since he was Prime Minister, have made this issue their mission; they should be congratulated on that.
Finally, as the Prime Minister talks of retreat, I ask only that the Government be more ambitious in the role we can play in the world, in particular through soft power. We have the potential for enormous influence and that can be utilised, not only to promote the interests of people and businesses in the UK but to build a fairer and better world. We may live, particularly now, in a divided country but we also live in a more divided world, threatened by conflict, extreme poverty and the climate crisis. Should the Prime Minister make it to the next G7 summit, at Camp David, I urge him to be more confident about the role that the UK can play in reshaping the world. We should not accept a diminished role but use our influence to try to create a better world.

Lord Newby: My Lords, I thank the noble Baroness the Leader of the House for repeating the Statement and hope that she enjoyed her short visit to Scotland last week.
We obviously share the sentiments of the Prime Minister and the noble Baroness, Lady Smith, in respect of World War II. However, we on this side fear that the Prime Minister has simply not learned the lessons. The Statement is very keen on the benefits of free trade, which we applaud, and mentions in particular the Prime Minister’s discussions with the President of  the United States on this matter. He says that he agreed with the President that healthcare would not be on the table, which is welcome. Did he also agree not to include items that would water down food standards? Was chlorinated chicken discussed? Given that the Prime Minister has said that he does not think we can do a trade deal within a year, how long does he think it will take to reach such a deal? How long would it be, even in theory, before any such deal could begin to make up for the loss of trade that we expect to flow from a no-deal Brexit?
The Statement does not mention the allegedly prolonged and acrimonious session at the summit in which the Prime Minister joined forces with the EU in opposing the readmission of Russia to the G7. Can the Leader confirm that the Prime Minister opposed President Trump on this? If he did, does not that demonstrate that in this, as in so many issues, our interests are much closer to those of Europe than the US?
As the noble Baroness, Lady Smith, pointed out, not only is more than half this Statement on Brexit but more than a third of it has absolutely nothing at all to do with the G7 summit and everything to do with the desperate plight in which the Prime Minister now finds himself. With the decision today of Phillip Lee MP to join the Liberal Democrats, the Prime Minister has lost his majority in the Commons. It is clear from statements and interviews given by Philip Hammond, David Gauke, Rory Stewart and Justine Greening, among many others, that he is going to lose the vote later this evening. The usual fate of Prime Ministers is that the longer they stay in power, the more hubristic they become. The current Prime Minister, as with so many other things, has turned convention on its head and has behaved, against all the evidence and from day one, as though old Etonian swagger and bombast will be sufficient to carry the day. The truth, however, is that it will not.
The Prime Minister in the Statement spends a large amount of time trying to give the impression that negotiations on an alternative to the backstop and withdrawal agreement are well advanced but, as Donald Tusk put it at the summit,
“we are willing to listen to ideas that are operational, realistic and acceptable to all EU member states, including Ireland, if and when the UK Government is ready”.
The key words there are,
“when the UK Government is ready”,
for the truth is that the UK Government had not at the time of the summit put forward detailed proposals—or, indeed, any proposals—which would obviate the need for the backstop. As EU officials said, at the end of it there were,
“no new substantive elements from any side and obviously”—
obviously—
“not from the UK side”.
They said that a week ago, so perhaps substantive new proposals have been made since then. Can the Leader of the House confirm whether any detailed substantive proposals have been made over the past week which   would obviate the need for the backstop? If so, when were they made, what has been the EU response, and on what day will they next be discussed by the UK and EU negotiators?
The Prime Minister said that the Chancellor of the Duchy of Lancaster has been working seven days a week to accelerate preparations for a no-deal Brexit, and we believe him. He says that we will be ready for such an eventuality. We are about to have a separate Statement on that issue so I will ask only two questions of the Leader of the House. When the Prime Minister talks of ensuring the uninterrupted supply of critical goods, does he include foodstuffs in the definition of “critical”? If so, on what basis does he believe he can guarantee the uninterrupted supply of all foodstuffs when the trade bodies representing the food sector simply disagree?
I was extremely pleased that the Statement covered the issue of species extinction, which was allegedly one of the Prime Minister’s three principal priorities going into the summit. That is a worthy priority. In recent times we have seen the extinction of the pig-footed bandicoot, the toolache wallaby and the indefatigable Galapagos mouse, among many others, and the world mourns their loss. The same will not be the case with the imminent demise of the present Administration.

Baroness Evans of Bowes Park: I thank the noble Baroness and the noble Lord for their comments. I can assure them both that the Prime Minister made very clear at the G7 summit that we will continue to be an energetic partner on the world stage and will stand alongside our G7 allies in addressing the most pressing international issues. He used the summit to show that Britain remains an international, outward-looking, self-confident nation, and said that we will remain at the heart of alliances that span the world. We will continue to use the breadth of our expertise in diplomacy, defence and development to uphold and safeguard the global order on which our peace and prosperity depends.
The noble Baroness mentioned the devastating fires in the Amazon. She is right. As the Statement said, we have announced £10 million of new funding, which is an extension of an existing UK project, Partnership for Forests, which goes to the longer-term efforts against deforestation. Our money is not going to the Brazilian Government but to rural communities and businesses to help them develop while protecting forests and managing land sustainably. The noble Baroness may also be pleased to know that, in addition, together with international partners we have pledged that by 2020 we will mobilise $5 billion a year to help reduce deforestation and promote sustainable land use in the world’s tropical forest basins, including the Amazon, working with local communities. We engage regularly with the Brazilian Government, businesses and communities on a range of environmental issues, including sustainable agriculture, low carbon growth and deforestation.
The noble Baroness asked about trade. We are and remain a champion of free trade and a rules-based multilateral system with the WTO at its heart. The Prime Minister underlined the need for the G7 countries to work together within the current framework to  address and resolve rising tensions on trade matters. We all agreed that the WTO needs an overhaul and further work is ongoing there.
The noble Lord, Lord Newby, asked whether the Prime Minister had discussed standards of food safety and animal welfare. I can confirm that the Prime Minister made it clear that, along with the NHS, those issues were not on the table for discussions in relation to a trade deal.
The noble Baroness asked about Yemen. I am not aware of any direct representations being made to the Prime Minister but I am happy to seek confirmation of that and, if there are, I will write to her.
The noble Baroness also asked about the Iranian Foreign Minister. Only President Macron met him, but she will be aware that President Trump later indicated an openness to talks with President Rouhani under the right circumstances; we will remain supportive of any moves to achieve that. We remain concerned about the welfare of Mrs Zaghari-Ratcliffe and particularly about reports of tougher restrictions in relation to her sentence. We are in regular contact with her family, and our embassy in Tehran has consistently requested consular access.

Baroness Smith of Basildon: I am sorry to interrupt the noble Baroness, but my point was whether the Prime Minister asked to meet the Iranian Foreign Minister.

Baroness Evans of Bowes Park: I shall have to confirm that. As I say, I do not believe he met anyone other President Macron but, when I check on the Yemen discussions, I will also check on that.
The noble Lord, Lord Newby, asked about the Prime Minister’s conversations about Russia. I can confirm that he made the point that Russia has not begun to meet the conditions that would be considered for its readmission to the G7. He made that point strongly both in conversations with Chancellor Merkel and President Macron and again in the full forum of the G7 summit when this issue was discussed. We are fully supporting French and German efforts to organise the Normandy format summit in the coming weeks. At this point it is not clear who the UK representative will be; discussions have not got that far yet.
On Hong Kong, the noble Baroness is right that millions of people have taken to the streets in Hong Kong to protest peacefully and express their concerns. We have consistently encouraged a peaceful resolution to the situation through meaningful dialogue. The Hong Kong Chief Executive’s office has said that it has full capability to deal with local affairs and maintain public order, and we expect the Hong Kong authorities to continue to be responsible for maintaining public order. The G7 leaders collectively expressed a deep concern about what is happening and want to support a stable and prosperous Hong Kong.
The noble Lord, Lord Newby, asked about ongoing discussions around the changes to the withdrawal agreement that we are attempting to agree with the EU. The Statement mentioned that the Prime Minister will be meeting the Taoiseach on Monday, so discussions  will continue there. A team of our Brexit negotiators will sit down with their counterparts twice a week throughout September to discuss the issues and, as we have made clear, the main issue for discussion is the backstop and the need to change it. It is the key reason why the withdrawal agreement has not been able to get through the House of Commons. We want a deal, and that is why our focus over the coming weeks will be on discussions about that.
I am happy to pay tribute to Members across this House and more broadly for the work they have done on education. It is an area in which I am particularly interested, and I know that in order to improve our education system we all need to work together. I am happy to say that.

Lord Howell of Guildford: My Lords, 3 September was the day we went to war. It was also the day of the Battle of Dunbar, which Cromwell called his crowning mercy; and it was also the day on which I joined the Army.
As my noble friend has made clear, many issues were discussed at the summit and it is a pity that it could not put together a communique showing some agreement on serious matters such as the polarisation of conflicts in Hong Kong, the Amazon burning and so on. So, we come down to the familiar issue of the unnecessary backstop. Here, I put to my noble friend a puzzle. Clearly, there has been some progress, but the puzzle is why there has not been more. Contrary to what the noble Lord, Lord Newby, said, an enormous amount of detailed work based on experience of borders all around the world has been done, is being developed and is being further pursued. Special zones work all around the world and can be used in Northern Ireland. I am familiar with that border because back in the 1970s I helped to try to police it for security reasons—with very little success, I may say, because it is totally permeable. We have the common travel area. The Republic of Ireland and the United Kingdom are both outside the Schengen area. Common provisions can be developed for livestock and all the necessary related checks. There is a huge amount of common activity already. It surprises many of us that, with all the work that has been done, progress is still very sticky and slow. Will the Leader of the House reassure her colleagues that those who have been involved with this border over the years understand that alternative arrangements are available, can be developed and can be pushed forward? If we do that, I think it would be understood by Mr Macron and other key players that—in his own words—it is unnecessary, and if it is unnecessary, why keep it?

Baroness Evans of Bowes Park: I thank my noble friend. He is absolutely right that a range of technical solutions are already being used. He mentioned a few. Others include trusted trader schemes, transit provisions, frontier zones and electronic pre-clearing for goods moving across the border. There is a lot of work ongoing, looking at how these solutions can come together in order to mean that we do not need the backstop.
My noble friend mentioned that there was no communique. France had said all along that it wanted to move beyond the standard format, which is why only a statement was published rather than a communique.

Lord Wigley: My Lords, may I press the Leader further on the backstop? She just read out, “any future agreement must include the abolition of the anti-democratic backstop—which is, by the way, opposed on all sides”. These are the words the noble Baroness used and which were presumably used by the Prime Minister earlier. Is it now the position that the Irish Government are opposing maintaining the backstop?

Baroness Evans of Bowes Park: That was in relation to the problems that the Government are having in getting the withdrawal agreement through the House of Commons and was in that context. It has been very clear that we will not be able to get the agreement through with the backstop. That has been one of the major issues that Members across the House of Commons have raised. That is why we are focusing on that issue with the Irish and our EU partners in order to ensure that we can remove it so that we can get the deal that we want and get agreement at the October Council.

Lord Cormack: My Lords, I remind my noble friend Lord Howell that 3 September was also the anniversary of the Battle of Worcester and of Cromwell’s death. It was a date that kept recurring right through his career.
I am extremely perplexed about the backstop. My noble friend, valiantly and rightly assisted by my noble friend Lord Callanan and many on these Benches, supported the deal that was agreed by Prime Minister May. Her Cabinet did so, and at the last time of asking the present Prime Minister did so. Why are we further splitting and dividing people by threatening with expulsion from our party those who steadfastly supported the previous Government and who have given collectively decades of service to our party and to our country? If we really are going to come together, as I would wish, with those who supported the last deal and support another one, which I want to be able to do, for goodness’ sake, can we not have some charity?

Baroness Evans of Bowes Park: My noble friend is right. Many of us valiantly attempted to persuade people that we should pass the deal, but, unfortunately, the House of Commons did not. It was rejected three times, and it was quite clear that we were not going to be able to get the deal through, which is why the Prime Minister is now focusing on the particular element which seemed to be the biggest area of concern for those in the House of Commons. We need to give him the freedom to do that. We need to make sure that we do not undermine his negotiating hand. He is confident that, from the conversations he has had with EU leaders and that his negotiating team has had, we can get a deal. That is what we are focused on. I have never stood here and said that I want anything other than a deal, and I believe that the Prime Minister is committed to trying to achieve that.

Baroness Neville-Rolfe: My Lords, growing protectionism is a great worry across the world, so it was refreshing to hear that the Prime Minister brought his energy to this area. As my noble friend the Leader said, he made the case for free trade as an engine of prosperity and progress and talked of the need to simplify regulation. Can my noble friend tell us a little more about WTO reform? I am reminded that the real progress was made in the Bali package, which was pushed through by my noble friend Lord Green of Hurstpierpoint when he was the Trade Minister. I very much hope those sorts of reforms can be extended. It was good to hear that the WTO might be being looked at again and pushed forward.

Baroness Evans of Bowes Park: The G7 reiterated its commitment to open and fair trade and to an overhaul of the WTO. The priorities for that are to ensure the continued effectiveness of the dispute resolution and settlement mechanism, increase trust in the system by improving transparency and develop new rules on issues such as industrial subsidies and e-commerce. Modernising the WTO rules will also make them more relevant to current trade issues. We strongly support the informal process launched by the general council at the WTO to seek a resolution to the appellate body issues, and we have been urging all WTO members to engage constructively on these ongoing discussions.

Bishop of Durham: I return to the question of girls’ education in the Statement. As it happens, last week I was visiting the tiny east African country of Burundi, and one of the most impressive pieces of work that I saw there was with adult women who had not had education when they were girls and who have now gone through literacy and financial and business training and were running small businesses in their local rural communities. I welcome the fact that more money is being put into the education of girls and of children in countries torn by conflict, because Burundi is one such. Will the Minister explain a little more about how that might be put into practice, particularly in a nation such as Burundi—and there are others—where at the moment there are restrictions on the Foreign Office giving it money because of its internal conflict, and will she promise that DfID will be able to put money into such countries through this kind of system?

Baroness Evans of Bowes Park: I hope the right reverend Prelate will be pleased to know that, in addition to the £90 million for young people which was mentioned in the Statement, we also announced £30 million of support for women entrepreneurs through the African Development Bank’s programme of affirmative finance action for women in Africa. This programme will help women entrepreneurs grow their businesses and complements other UK aid programmes that support finance for women entrepreneurs, women in international trade and large corporates employing women in their supply chains. In relation to the £90 million of UK aid to help 600,000 young people caught up in crises around the world, one-third of that money will be earmarked for children living in the world’s forgotten crises, such as the current emergency in the Sahel region. Education Cannot Wait will implement this programme. It currently operates in 29 countries and  provides multi-year programmes and short-term interventions, particularly when conflict and natural disasters strike.

Lord Hope of Craighead: My Lords, I wonder whether the noble Baroness can say a little more about the UK proposals for more ambitious targets to halt and reverse the loss of biodiversity, particularly in the oceans around the British Isles. I am interested because we have probably the largest population of North Atlantic gannets of any European country. We have enormous numbers of puffins nesting on our islands around the country and they are dependent on the quality of the seas and the fish that are in them. It is very encouraging if we are going to be investing money to improve the quality of the seas. I am interested to know whether the noble Baroness can say a bit more about what the proposals really are and whether they are designed to assist our bird-life as well as the fish in the oceans.

Baroness Evans of Bowes Park: Britain is responsible for 2.6 million square miles of ocean: we are the fifth largest maritime estate in the world. The Prime Minister announced £7 million for the Blue Belt programme to extend our work to protect the vital marine ecosystems in conservation areas, although that was overseas rather than within the UK. As for biodiversity targets in particular, for a number of reasons the current set of global targets have not reversed the global decline in biodiversity; therefore we discussed at the G7, which accepted our proposals, that we should seek to ensure that the ambition of the new global framework matches the scale of the problem, and that targets are measurable and time-bound, with strong accountability through monitoring and review mechanisms.

Lord Campbell of Pittenweem: My Lords, I respectfully caution the Leader of the House when it comes to interpretation of the paragraph that begins:
“Speaking in Berlin of possible alternatives to the backstop, Chancellor Merkel … said: ‘Once we see and say this could be a possible outcome—this could be a possible arrangement—this backstop is a sort of placeholder which is no longer necessary’”.
The last part of that paragraph is a conclusion, not a statement of an unequivocal position, and the conclusion depends upon something that is regarded as a possible outcome or arrangement. Until the United Kingdom provides something that can be a possible outcome or arrangement, the conclusion is valueless.

Baroness Evans of Bowes Park: As I said, the Prime Minister has had good initial conversations with Chancellor Merkel, President Macron and others, he is seeing the Taoiseach next week, and he has been encouraged by the fact that there has been a willingness to talk about alternatives to the backstop. We are picking up the tempo of the discussions between our negotiators over the coming weeks so that we can drill down into the issue that has really prevented MPs supporting the withdrawal agreement. That is what we will be focusing on, because we are committed to trying to get a deal.

Baroness Finlay of Llandaff: My Lords, following up the right reverend Prelate’s question about the education of girls, it is to be commended that 12 years  of quality education was endorsed. Can the noble Baroness tell the House how much money has been committed by other nations and how much commitment there is to ensure that it is quality education that will actually meet the needs of these girls, including reproductive health teaching? Many of these countries have very high maternal mortality as well as child mortality rates, and they also have the problem of practices such as female genital mutilation, which has its high morbidity and mortality.

Baroness Evans of Bowes Park: I am very pleased that every delegation supported our campaign to give every girl in the world 12 years of quality education. Indeed, the Prime Minister also called on G7 countries to dedicate more of their aid budget to education, which currently stands at less than 2% of global humanitarian aid. It is obvious that, with more investment and support going in, all the very important issues that the noble Baroness raised can be properly addressed. I fear I will need to get more information on the details of the programmes we support and others: I will write to her, as I will on a couple of other issues.

Lord Wallace of Tankerness: My Lords, the noble Lord, Lord Cormack, reminded us that the Prime Minister voted earlier this year for the withdrawal agreement, which included the backstop. Yet he has said subsequently, and indeed repeated in the Statement, that the backstop is anti-democratic. Are we to believe, therefore, that we have a Prime Minister who is prepared to vote for measures that he believes to be anti-democratic?

Baroness Evans of Bowes Park: No, I think this shows that the Prime Minister is committed to getting a deal. He voted for one, but the House of Commons did not. He is now trying to get one and to ensure that we can present a deal to the House of Commons that MPs can support, in order that we can leave the EU with a deal.

No-deal Update
 - Statement

Lord Callanan: My Lords, with the leave of the House I will now repeat a Statement made today by my honourable friend the Chancellor of the Duchy of Lancaster in another place. The Statement is as follows:
“Thank you very much, Mr Speaker. This is the first time that I have appeared at the Dispatch Box since I moved on from the Department for Environment, Food and Rural Affairs, and I take this opportunity to thank the superb team of civil servants at the department who do so much to improve the lives of so many citizens of this country. With your permission, I will make a statement about preparations for our departure from the European Union.
More than three years ago, in the biggest exercise in democracy in our country’s history, the British people voted to leave the European Union, but so far this Parliament has failed to honour that instruction. Now our Prime Minister has made it clear that we must  leave by 31 October, and so we must. Trust in this House depends on it, and trust in our democracy depends on it. Now, of course, this Government are determined to secure our departure with a good deal, one that paves the way for a bright future outside the single market and the customs union. The response that the Prime Minister has received from European leaders shows that they are ready to move. They want a deal, too. They are moving because the Prime Minister has been clear that matters must be resolved by 31 October. If we drift, the incentive on them to deliver will quickly dissipate. So I hope my colleagues in the House of Commons will give the Prime Minister the time and the space he needs to pursue the opening he has secured and get a good deal that we can all support.
But, of course, we must be prepared for every eventuality. The European Union may not change its position sufficiently before 31 October, it may be that a deal is not secured, so we must be ready to leave without a deal on 31 October. Leaving without a deal does not mean that talks with our European partners end altogether. In those circumstances, after we depart without a deal in place, we will all want to discuss how we can reach new arrangements on trade and other issues. But while those conversations go on, we must ensure that we are ready for life outside the EU, as a third country trading on WTO terms.
There has been extensive speculation about what leaving without a deal might mean for businesses and individuals. Moving to a new set of customs procedures, adjusting to new border checks and dealing with new tariffs all pose significant challenges. Nobody can be blithe or blasé about the challenges that we face or the scale of work required, but, provided the right preparations are undertaken by government, businesses and individuals, risks can be mitigated, significant challenges can be met and we can be ready.
Leaving without a deal is not an event whose consequences are unalterable. It is a change for which we can all prepare, and our preparations will determine the impact of the change and will also help us to take advantage of the opportunities of life outside the EU. We have, of course, to prepare for every eventuality. That is the function of Operation Yellowhammer; it is an exercise in anticipating what a reasonable worst-case scenario might involve and how we can then mitigate any risks. Operation Yellowhammer assumptions are not a prediction of what is likely to happen, they are not a base-case scenario or a list of probable outcomes. They are projections of what may happen in a worst-case scenario and are designed to help government take the necessary steps to ensure that we can all be ready in every situation.
Since the new Government were formed at the end of July, new structures have been put in place to ensure that we can be ready in every situation and to accelerate our preparations for exit. Two new Cabinet committees have been set up, XS and XO, to discuss negotiating strategy and make operational decisions about exit respectively. XO meets every working day to expedite preparations for exit and we are in regular contact with our colleagues in the devolved Administrations, including the Northern Ireland Civil Service, and thousands of the best civil servants across the UK are  working to ensure the smoothest possible exit. We have been helped by the Chancellor’s move to double Brexit funding for this year, announcing an additional £2.1 billion on top of expenditure already committed—so £6.3 billion in total has been allocated to prepare for life outside the European Union. That money is being used to provide practical help to businesses and individuals.
Guaranteeing the effective flow of goods across our border with the EU is, of course, central to our preparations. That will require action by businesses to adjust to new customs procedures and intervention by government to ensure the freest flow of traffic to our ports. That is why HMRC has announced an additional expenditure of £16 million to train thousands of customs staff, traders and hauliers, so that trade with the EU continues as smoothly as possible. It is also why today we are announcing £20 million more to ensure that traffic can flow freely in Kent and trucks arriving at Dover are ready to carry our exports into the EU. On business, we have automatically allocated an Economic Operator Registration Indicator number, or EORI number, to 88,000 companies across the UK. Businesses can also register for transitional simplified procedures to delay the submission of customs declarations and postpone the payment of customs duties.
New transit sites have been built in Kent to smooth the flow of goods into the EU, and we are also recruiting 1,000 new staff to help maintain security and support flow at the border. The Government will do all they can to support businesses to get ready, but many of the steps required to ensure the smooth flow of trade fall to businesses. We will provide advice, finance and flexibility over how revenue payments may be settled, but it is important that businesses familiarise themselves with the new requirements that exit will involve.
That is why we have launched a public information campaign, Get Ready for Brexit, to give everyone the clear actions they need to prepare. As well as TV and radio advertising, there is now a straightforward, step-by-step checker tool available on the government website, GOV.UK/Brexit, so that all of us can identify quickly what we may need to do to get ready. The Government have also acted to provide assurances so that businesses and individuals can have the maximum level of confidence about the future.
We have signed continuity agreements with countries covering more than £90 billion in trade, and we have replacement civil nuclear trading agreements with Canada, the United States of America, Australia and the IAEA. We have secured aviation agreements with 14 countries, including the US and Canada, and we also have arrangements with the EU on aviation, roads and rail to ensure smooth travel between the UK and European nations. We also have arrangements on education exchanges, social security, fisheries, climate change and a number of other areas. It is also the case that arrangements are in place covering financial services, so that a range of transactions can continue to take place and financial and market stability can be underpinned. Of course, we have a robust legal framework in place.
Six exit-related Bills which cater for different scenarios have been passed by Parliament, the Government have laid more than 580 EU exit statutory instruments and  they are of course also determined to ensure that we protect the rights of both UK nationals in the EU and EU citizens in the UK. I personally want to thank the more than 3 million EU citizens living and working here for their positive contributions to our society. You are our friends, our family, our neighbours. We want you to stay and we value your presence. Under the EU settlement scheme, more than 1 million EU citizens have already been granted status.
Let me be clear. EU citizens and their family members will continue to be able to work, study and access benefits and services in the UK on the same basis after we exit the EU. Of course, the Government will do everything in our power to make sure that UK nationals can continue to live in the EU as they do now. We will continue to offer support for UK nationals to help them secure their rights in their home member state, including those associated with residency, access to healthcare, voting, driving and the validity of their passports. Indeed, the Government are providing up to £3 million to assist UK nationals with registering and applying for residency as we leave the EU. However, the UK Government cannot protect the rights of UK nationals unilaterally. We welcome the fact that all member states have drafted or enacted legislation to protect the rights of UK nationals and fully reciprocate our commitments to EU citizens, providing UK nationals with the certainty they deserve.
Of course, there are other decisions that the EU and member states have said that they will take that will have an impact on us all if we leave without a deal. The EU’s commitment that we will be subject to their common external tariff in a no-deal scenario will impose new costs, particularly on those who export food to Europe. Indeed, the EU’s current approach to the rules of the single market will, as things stand, require the Republic of Ireland to impose new checks on goods coming from Northern Ireland. For our part, we will do everything we can to support the Belfast agreement and mitigate those impacts, including providing targeted support for our agriculture sector and for Northern Ireland’s economy.
While these are real risks that we must deal with, there are also many opportunities for life outside the EU. We can reform government procurement rules to support UK businesses and get a better deal for taxpayers. We can forge new trade relationships to help UK businesses grow. We can innovate more energetically in pharmaceuticals and life sciences. We can develop crops that yield more food and contribute to better environmental outcomes. We can manage our seas and fisheries in a way which revives coastal communities and restores our oceans to health. We can introduce an immigration policy that is fairer, more efficient and more humane. We can improve our border security and deal better with human trafficking and organised crime. We can open new free ports across the country to boost undervalued communities and we can support businesses more flexibly.
There are undoubted risks and real challenges in leaving without a deal on 31 October, but there are also huge opportunities and new possibilities for our country outside the EU. It is my job to mitigate those risks, overcome those challenges and enable this  country to exploit those opportunities and extend to every citizen those new possibilities. That is why I commend the Statement to the House and am confident that, as a nation, our best days lie ahead”.

Baroness Hayter of Kentish Town: My Lords, I commiserate with the Minister on having no holiday while the rest of us were away. I thank him for repeating the Statement, but it begs some serious questions. The whole Statement is predicated on the idea that we must leave by 31 October come what may, whatever the costs, whatever the damage to our security and economy and whether or not we have a deal. It seems that everyone bar the Government knows the costs of no deal, whether on UK citizens abroad, from investors already taking billions out of the UK, Toyota ceasing production on 1 November, food, medicines, arrest warrants, data flows or transport disruption, with chaos in Dover and Portsmouth. All of that is known. Alone among business, commentators and academics, only the Government downplay the risks.
Michael Gove told Andrew Marr that,
“everyone will have the food they need”,
with no shortages of fresh food, but the British Retail Consortium immediately retorted:
“It is categorically untrue that the supply of fresh food will be unaffected”.
The British Poultry Council warned that no deal would be catastrophic for consumers of poultry. Even the Government’s own Yellowhammer paper predicted that fresh food supply will decrease, with reduced availability and choice and increased prices, which will affect vulnerable groups.
What was the reason for Mr Gove’s statement to Andrew Marr? It cannot be that he was telling an untruth, because the Minister is an honourable man. It must be that he cannot understand, so let me spell it out. The fashion industry says that we would lose £900 million. The BMA predicts that leaving without a deal would dramatically worsen NHS winter pressures. The Government’s own assessment sees a possible 40% cut to medicines crossing the channel on 31 October, with significant disruption for up to 6 months, reducing our ability to prevent and control disease outbreaks.
There is more. The Yellowhammer report says that autumn and winter risks, such as flooding and flu, could be worsened by no deal. It says that on exit day, between a half and 85% of HGVs may not be ready for French customs and, with limited space in French ports, HGV flow could halve within one day, the worst disruptions lasting for up to three months. There would be queues in Kent, with HGVs possibly facing one and a half to two and a half days’ delay before being able to cross, as well as disruption to fuel distribution, and passenger delays at St Pancras, the channel tunnel and Dover. This is all from the Government: I am not inventing it.
Law enforcement data and information-sharing between us and the EU would be disrupted and, as there is no data agreement in place, the flow of personal data would be disrupted where an alternative legal basis is not in place.
In Northern Ireland, the Government’s “no new checks with limited exceptions” model from March to avoid an immediate return to a hard border is, say the Government, likely to prove unsustainable because of economic, legal and biosecurity risks, while disruption and job losses could result in protests and road blockages. As today’s Statement says, Ireland will have to impose checks on goods arriving from Northern Ireland, with enormous, irresponsible implications for the peace process.
Gibraltar will similarly see disruption to the supply of food and medicines, as well as delays of four-plus hours at the border for at least a few months for frontier workers, residents and tourists, with delays over the longer term likely to harm Gibraltar’s economy. Those are all quotes from the government paper, not from anyone else. Similarly, it says that Britons in Europe will lose their EU citizenship and can expect to lose associated rights and access to services.
The Government set out all those risks. Indeed, they had the honesty to admit that the poor,
“will be disproportionately affected by rises in the price of food and fuel”.
So why do the Government persist in pursuing a no-deal exit? Going back to Shakespeare, we know that the Ministers “are honourable men”, and “I will not do them wrong”, but they have some explaining to do. They state:
“Her Majesty’s government will act in accordance with the rule of law”,
but they fail to promise to obey the law, and with no deal they fail in the first obligation of a Government—to safeguard the security and welfare of the people.
The Statement talks about “trust in our democracy”. What trust can there be in a Government who prorogue Parliament to avoid scrutiny, who play loose and free with people’s futures and who seek to engineer an election rather than allow Parliament to pass a law? The noble Lord, Lord Cormack, reminded us that it is the anniversary of the death of Cromwell, who too became a politician with rather dictatorial ideas beyond his station and was, I think, the last person to get rid of a Parliament that got in his way. I hope that we do not need to be reminded of that in the future.
Therefore, I am not very happy with the Statement but I have three specific questions for the Minister. First, what is the Government’s assessment of the impact of disruption to transport at Portsmouth on the flow of medicines? Secondly, what is their assumption of the risk of public disorder on exit day? Thirdly, what is the evidence that the Government’s “Get ready for Brexit” communications strategy will actually affect business preparedness, which they admit is currently very low? Frankly, the Government will have to do much better than they are currently doing if we are to be anywhere near being prepared to Brexit in an orderly manner.

Baroness Ludford: My Lords, I too thank the Minister for repeating the Statement. I start by noting the fact that, after the welcome move of Dr Phillip Lee MP from the Conservatives to the Liberal Democrats, the Government have no parliamentary majority, let alone any majority for no deal.
Historians of Brexit will examine as a major theme how a party supposedly characterised by conservatism and caution about change got hijacked by radical and revolutionary forces that would make Marx and Trotsky blush. The marketing by Brexiters has morphed from a promise of sunlit uplands to at least a “smooth, orderly exit”, to the gritted teeth of “no deal is better than a bad deal”, to the reckless and irresponsible promotion of destruction, damage and chaos as an actual goal of government. Phrases such as “Do or die” or “Come what may”, which we heard this afternoon, show the incredibly cavalier attitude of the Government and the Prime Minister, who have no mandate whatever for no deal.
The contortions of Brexiters in trying to claim that the narrow leave majority in 2016 knowingly voted for a crash-out Brexit would be laughable were they not so despicable. The real interests of the economy, businesses, workers, citizens, consumers and patients are mere grist to the mill of a dogmatic, ideological obsession. As the TUC’s general-secretary Frances O’Grady has said, a no-deal Brexit will be a disaster for working families. The OBR tells us that the public finances will take a £30 billion hit, and I was interested in all the examples given by the noble Baroness, Lady Hayter. I want to pick up one assertion in the Statement—that outside the EU,
“we can innovate more energetically in pharmaceuticals and life sciences”.
That is the total opposite of what the pharmaceutical industry and the research sector have constantly said for the last three years.
To achieve this disaster, the Government are wasting £6.3 billion. Just think what could be done to improve the lives of British people with that money and, for instance, to help the victims of the Bahamas hurricane. After the confusion and then U-turn on the end of free movement on 31 October, can the Minister specifically tell us how the absence of any transition and of a stable legal framework will help not only to ensure the rights of EU citizens in this country, where we already know that there are difficulties with the settlement scheme, but to improve the prospects for UK citizens in the EU 27? It is difficult to see.
The dishonesty of this whole process is shown by the fact that Mr Gove has refused to publish even what the FT called a “watered-down” version of the Government’s Operation Yellowhammer no-deal contingency plans,
“after ministers decreed that the findings would … alarm the public”.
Indeed, but it is a cover-up. It is rare that I applaud the Daily Mail but it has apparently obtained, I think, the whole document—at least an annexe—showing exactly how major disruption will be caused for months. How can a Government inflict that on the country?
The right honourable Jacob Rees-Mogg outrageously accused a senior doctor who helped to write the Yellowhammer plan of fearmongering—a typical disparagement of experts—but it is legitimate to ask how many extra deaths the Government expect as a result of a lack of drugs and isotopes. I speak as someone whose husband’s life depends on insulin. Can the Minister please tell us the answer?
The Statement claims that,
“this Government are determined to secure our departure with a good deal”.
The former Chancellor tells us that that is nonsense, and even a story in today’s Telegraph says that it is untrue. As for the assertion that the Prime Minister has received a response from European leaders that they are “ready to move”, that is completely unconfirmed by the new noises coming out of Brussels. President Juncker has told the Prime Minister that the EU will look at proposals,
“as long as they are compatible with the Withdrawal Agreement”.
He added that the EU’s support for Ireland—that is, for the backstop—“is steadfast” and that a no-deal scenario will only ever be the UK’s decision, not the EU’s. The blame game is not working.
Meanwhile—I am coming to an end—I have seen an official document from last week about the work on alternative arrangements. It says:
“DExEU has been considering whether a paper consolidating the findings from all of the advisory groups should be published in late September/early October. However, we and other departments have cautioned against this given the potential negative impacts on the renegotiation with the EU and we understand No. 10 are in agreement that we are not in a position yet to publish anything”.
It is later explained that the complexity of combining all the aspects of claimed facilitation,
“into something more systemic and as part of one package is a key missing factor at present”.
I repeat: that document was published last week.
Finally, on the day after crashing out with no transition, the UK would have to come back to the negotiating table and pick up the bits from an even worse position. How would that improve the prospects of the country in the longer term? I hope that the Government can reassure us that, if the anti-no-deal Bill passes, they will obey it and that they will pull the £100 million being spent on the propaganda—I mean “information”—exercise as it will be unnecessary.

Lord Callanan: My Lords, I first thank both noble Baronesses for their comments. I see that they have both been well rested over the summer and have returned in a suitably combative mood. I particularly welcome the noble Baroness, Lady Hayter, back to her place on the Front Bench where she deserves to be. She is a worthy opponent and I for one would have been sorry to see her go. I am delighted to see her back.
A number of points were raised. I will first address the comments of both noble Baronesses about Operation Yellowhammer. I said in the Statement, but will say again, that Operation Yellowhammer is a series of planning assumptions based on a reasonable worst-case scenario. It is not—I repeat, not—a prediction of what might happen. It exists to underline government planning; it is a series of assumptions put together through a lot of work by independent experts. It is constantly revised as new information comes to light and new mitigations are put in place. The Cabinet Office’s Civil Contingencies Secretariat does the same thing in a number of different areas—on flooding, for instance. As it is predicted that we will have various flooding events, worst-case scenarios are considered: what they may involve and what we can do to mitigate them. The same thing is done in a lot of other areas that I could mention.
So, that is what it is: we use Operation Yellowhammer for planning assumptions. What is more useful for people is to know how they can mitigate any possible effects of no deal themselves, what changes businesses can bring about et cetera. The noble Baroness quoted a number of pathways from that; it is appropriate to bear in mind that the figures she cited are not predictions but reasonable worst-case scenarios to help us in our preparations to mitigate them.
With regard to food, there are often interruptions to the supply chain of foodstuffs, whether by the various strike actions of ferry operators, fishermen or farmers in France, or because of inclement weather conditions. But the UK food supply logistics chain is solid and robust, and we are, of course, working with the various companies to make sure supplies continue uninterrupted. The same thing applies to medicines: the Department of Health and Social Care has been making extensive preparations. It has contacted every supplier of medicines and medical devices in this country. We have helped them to increase their stockpiles—they already hold considerable stockpiles but we have helped to increase them further against any possible disruption. We have secured additional transport capacity should that that be required, and we are working extensively with companies to ensure there is no interruption.
I was interested in the comments of the noble Baroness as it appears that the Labour Party is now in the position of being against everything. It is against a deal, against no deal, against revocation of Article 50, and mostly against a referendum. I know that the job of the Opposition is to oppose but I would like to think that eventually, at some stage, the Labour Party will decide to be in favour of something.
I turn to the questions from the noble Baroness, Lady Ludford. I have been called many things in the course of these debates but “Marxist” and “revolutionary” are new ones, if she was indeed referring to me in those terms. It is, however, to the credit of the Liberal Democrats that at least they are honest about their intention to overturn the result of the referendum. Many of us suspect that this is also the intention of the Labour Party but that it has not yet—with one or two exceptions—got around to admitting it.
The noble Baroness, Lady Ludford, also asked about free movement. Yes, as it currently stands under EU law, free movement will of course end on 31 October when we leave; the Home Secretary will say more about that shortly. With regard to negotiations, the noble Baroness has, as do I, extensive experience in dealing with various EU figures. She will know as well as I do that they have maintained religiously for months that not one dot or comma of the withdrawal agreement will be changed, yet when there is a different attitude from this Government and we make clear that we are prepared to leave anyway, suddenly President Macron and Chancellor Merkel demonstrate some movement. Private discussions and negotiations are continuing but the noble Baroness knows as well as I do that we are seeing some movement. Whether it will be enough we will have to wait and see, but we are working extensively and at pace to try to get a deal that we can put to the House of Commons so that we can leave  with a deal. As I have said repeatedly from this Dispatch Box, that is our preferred outcome, but we have to be prepared to leave without a deal if it is not possible to obtain one.

Baroness Hayter of Kentish Town: Will the Minister agree to write in answer to the three very specific questions I raised, which he has not answered?

Lord Callanan: I thought I had answered the noble Baroness’s questions; if I have not, I will be happy to write to her.

Lord Cormack: My Lords, I have great admiration for my noble friend the Minister; he is an extraordinarily resilient man, but I have to say that his Statement this evening has not filled me with great happiness. Is he aware that there is enormous unhappiness in Northern Ireland, where 56% of those voting voted to remain? They accept the result, as I do, but many worry that if we come out without a deal and stumble on the backstop, as it were, they will be in a very precarious position. Can he say something to calm people? Is he also aware that around 2 million EU nationals are very unhappy and worried? Can we have an absolute undertaking that legislation will be unilaterally introduced and fast-tracked if we should come out without a deal? Can he, finally, undertake—especially if Parliament is prorogued—to put all the Yellowhammer documents in the Libraries of both Houses so that they are accessible? Members will be able to come here during the prorogation period to look at them. It is a poor second best to a functioning Parliament, and I hope we will have one, but can he give that undertaking? We have the right to know—to see and read those documents.

Lord Callanan: My noble friend will understand that I view it as a considerable failure that I have not managed to reassure him and contribute to his happiness. I will do my best in the days and weeks ahead to bring that unhappy state of affairs to an end. To be serious, he makes a very valid point about Northern Ireland. We are incredibly conscious of the need to protect the peace process. For the avoidance of any doubt, I restate our total commitment to the Good Friday agreement and our commitment that there will not be a hard border in Northern Ireland; certainly, that will not be imposed by this Government. We are very happy to enter a legal commitment to that effect should it help the negotiations.
The noble Lord also makes a very good point about EU nationals. The settled status scheme that we have introduced has been incredibly successful. I said in the Statement that over a million citizens have applied under that scheme. When I checked last week, applications were running at over 15,000 per day. I do not think anybody has been refused under that scheme. The guarantees we have offered to EU nationals in this country are excellent. We guarantee all their existing rights, including access to healthcare and benefits. It would be nice if EU member states were prepared to  offer to UK citizens living in their countries the same guarantees that we have offered. That would help to take the process forward.
Lastly, with regard to publication, we continue to make available a wide range of documentation. If my noble friend wants to consult GOV.UK, he will see the extensive documentation and guidance available for businesses and individuals on all manner of scenarios, with case studies. We will, of course, link this to the publicity campaign to try to make people—businesses, hauliers and others—aware of what they need to do to get ready for Brexit.

Baroness Finlay of Llandaff: My Lords, the Minister has mentioned planning a great deal. Can he confirm that planning for agriculture is not restricted to Northern Ireland—the subject of the paragraph where it was mentioned—but also applies to Wales and other hill farmers around the UK? Can he confirm that money will be available on 1 November to support those farmers who have been dependent on EU funding to maintain their ongoing viable production? Can he confirm that there is commitment to equitable food and medicine distribution across the UK, not only in England, particularly considering the logistics of the rural areas of Wales?
How much money is being allocated specifically to support the needs of Wales, where there are more SMEs per head of population than in other parts of the UK? They need money to tide them over. The first-tier producers who are trading are already seriously squeezed because they find themselves at a disadvantage in both food manufacture and component manufacture. The Welsh Government need to know that there is a firm commitment to funding.
My final question concerns whether the Cabinet will allow the Welsh Government to process the settled status to remain, a request that they put through some time ago but was previously refused. It would allow European passport holders resident in Wales to be assured of being processed rapidly.

Lord Callanan: There were a number of questions there; I think I wrote them all down but I am sure the noble Baroness will remind me if I forget any. On agriculture, I am happy to confirm that the Government have said that all existing CAP payments will be continued after we leave the EU. Indeed, it is possible that additional payments will be available to farmers if required because we recognise that one of the challenges that the farming community will face is the application of the EU’s common external tariff, which, because of the protectionist nature of the EU, is particularly high with regard to farming products. We recognise that agricultural communities face a particular problem.
Of course these guarantees apply across the entire nation. I can say with particular regard to Wales, but also with regard to Scotland, that the devolved authorities have been involved in all our planning. Indeed, Ministers from the Scottish and Welsh Governments, together with Northern Ireland civil servants, were present at our XO Cabinet committee meetings last week. Jeremy Miles from the Welsh Government was there last week.
I have to say that I did not understand the noble Baroness’s question about the settled status scheme. Obviously, EU citizens in Wales can apply to the Home Office for settled status, just as they can in every other part of the UK. I am not sure that there would be any particular benefits in having a separate process for those EU citizens living in Wales. I did not quite understand the point of that. Perhaps the noble Baroness can talk to me afterwards and we will try to resolve that issue.

Baroness Quin: My Lords, the Prime Minister famously said earlier this summer that the chances of leaving without a deal were a million to one against. Does the Prime Minister still feel that those are the odds? If not, what is his assessment of what the odds are, faced with current circumstances? Following what has been said about Wales, is Operation Yellowhammer also looking at the regional implications within Britain of a no-deal Brexit? With regard to the point made about publication, it would be very welcome if information about this were to be published.

Lord Callanan: Probably like the noble Baroness, I am not particularly a betting fan, so I will decline the invitation to put odds on the prospect of a deal. I will just say that we are working extensively towards one. I repeat that we want a deal and we think that the EU wants one too, but I have to say that some of the movements in Parliament in another place are not making it any easier to get one.
With regard to local government, yes, we are in extensive consultation with local government across the UK. We fully realise the role that local government will have to play in the preparations. Additional funding has been made available to local resilience forums and to individual local authorities. The Secretary of State for Housing, Communities and Local Government has regular conference calls with leaders and elected mayors. All local authorities have appointed a Brexit lead with funding that has been made available, and we are working extensively with local government in the regions and around the country. The noble Baroness’s points are well made.

Lord Hannay of Chiswick: My Lords, will the Minister just answer a couple of questions on the Statement? First, he referred to the disadvantage that we were going to suffer through the application of the common external tariff, particularly to agriculture, which he attributed to a great deal of protectionism, which of course we ourselves have been applying for the past 45 years. Could he confirm that the application of the common external tariff to our exports is not a decision made in Brussels but one made under the rules of the World Trade Organization, from which we know nothing but good comes? It is required by WTO rules that if there is no agreement between us, the common external tariff and our external tariff have to be applied against each other.
Secondly, could the Minister explain his confidence that the internal security arrangements in the UK will not be damaged? How on earth will they not be damaged when we lose the use of the arrest warrant,  the ECRIS information system, the Schengen information system and Prüm identifiers? Surely the view of the whole law enforcement community has been made quite clear that these will be serious losses.
Lastly, will he not admit that we might be in a better position than we are now if the Government had accepted the views of the House that an inquiry should have been conducted by the end of September into the costs and implications of leaving without a deal?

Lord Callanan: I thank the noble Lord for his questions. On his first, about the common external tariff, I did not quite understand the point he was making. The reason the EU’s common external tariff is so high is that that is what the EU has determined. It is the decision of Brussels, or rather the EU, that it should be so high. Of course, under WTO rules, once it has been determined that it is a high tariff, it needs to be applied consistently to all third countries, but I am not sure what point he was making.
On internal security arrangements, we are working extensively to try to mitigate the effects. We have had extensive discussions in the XO committee with all the security agencies. This is one of the areas where we are trying to persuade the EU to take a different approach. There are ways to mitigate the loss of some of these databases—there are alternative sources of information on passenger information records, for example—but we are one of the largest contributors to these databases as well, and not being able to exchange information with other EU member states on terrorism suspects, criminals and so on is a loss for both us and the EU. I hope the EU will be persuaded that this really is a lose/lose situation, that it will see sense and that we will be able to continue exchanging information. As I say, mitigations are in place with regard to some of the databases. We have discussed this with the law enforcement communities and they are working intensively to ensure that we can still make the appropriate interventions in terrorism and crime.

Baroness Smith of Newnham: My Lords, the Statement suggests that six pieces of legislation have been passed, but where are the agriculture, fisheries and immigration Bills? Should they not be made Acts before we leave the EU? Given that the ONS has now requested that our international migration statistics be deemed “experimental statistics”, can EU nationals already resident in the UK really trust the Government to understand and know that they are resident on exit day? Are their rights really going to be guaranteed?

Lord Callanan: Yes, EU nationals’ rights are guaranteed. As I said, the rights that we have offered to guarantee to EU nationals are more extensive than those offered by other EU member states to British citizens. Sorry, could the noble Baroness remind me what her first question was?

Baroness Smith of Newnham: We have apparently passed six Brexit-related Acts, rather than just SIs. Should we not also have passed agriculture, fisheries and immigration before we leave the EU?

Lord Callanan: There are indeed a number of other pieces of legislation currently held at various stages in both Houses. However, as my noble friend said earlier today, we do not require any of those Bills in order to have a functioning statute book on exit.

Lord Wigley: My Lords, I will press the Minister further on the sheep meat sector. It is not just a question of the CAP replacement, but of who will be buying up those sheep on 1 November. Millions of farmers in Wales and other highland areas will be destitute if they do not get money. The Government have said that there will not be a slaughter scheme; is that still the position? If not, will there be an intervention purchase scheme?

Lord Callanan: We are aware of the challenges that exist for the agricultural sector. I confirmed in a response to the noble Baroness earlier that CAP payments will continue, but we are considering what other interventions need to be made to support the farming sector at what will be a difficult time.

Lord Pearson of Rannoch: My Lords, does the Minister recall his recent Written Answer to me saying that if we end up trading on normal WTO terms, EU exporters will pay us some £14 billion per annum in new tariffs while our exporters will pay Brussels some £6 billion in new tariffs, making us an annual profit of £8 billion? Given the mess we are in, why do the Government not offer the EU a completely new deal in the shape of a very short treaty under the WTO? It could continue our free trade together exactly as now, thus getting rid of the Irish border problem and all the paraphernalia of Operation Yellowhammer. Would that not be a generous offer that even Brussels might find hard to refuse?

Lord Callanan: I always like questions from the noble Lord; they offer a degree of simplicity which perhaps does not always exist in real life.

Lord Liddle: My Lords, I want to be constructive and say that I think it is very difficult to judge what the consequences of no deal will be. One of the reasons for this is that the Commission has put actions in place that will relieve some of the consequences temporarily. Also, we do not know with what rigour our one-time partners on the other side of the Channel will implement border controls, so there are uncertainties. Does the Minister accept that there will be consequences and that we will end up having to talk to Brussels about them? As a result, does he not think it very important that, if there is no deal, we adopt the most constructive approach possible to relations with our former EU partners? Does he therefore accept that threats of withdrawing the money—our financial obligations under the withdrawal agreement—are exactly counterproductive to what the Government will need to do with our partners, should there be no deal?

Lord Callanan: I thought I would be able to agree with everything the noble Lord said, for a change. I completely agree with the first part of his question. That is why, under our arrangements, we look at reasonable worst-case scenarios, because of course we  do not know what the precise attitude of partner countries on the other side of the Channel will be. My colleague the Chancellor of the Duchy of Lancaster visited Calais last week and had extremely positive discussions with the French local and regional authorities. It is certainly not their desire to cause unnecessary disruption. However, the noble Lord is also completely correct that we will need to have discussions and make agreements with our European partners either before or after our exit. We have said this. We have a constructive relationship. We hope that the Commission might want to talk about some of these issues before we leave, but if it will not, there is nothing much we can do about it.
On the financial settlement, the financial offer in the withdrawal agreement is effectively a political agreement. We accept that there are some legal obligations; we are a law-abiding nation and we will meet these. However, if the withdrawal agreement is not passed and agreed, then the obligation to pay £39 billion will fall away—some of it has already been paid, of course, because of our extension. We will need to have discussions about precisely what our legal obligations are.

Education Funding
 - Statement

Lord Agnew of Oulton: My Lords, with the leave of the House, I will repeat a Statement made in the other place earlier today by my right honourable friend the Secretary of State for Education. The Statement is as follows:
“With permission Mr Speaker, I am delighted to make a Statement today confirming the Prime Minister’s weekend announcement. This Government have committed an extra £14 billion to our schools across England over the next three years, ensuring that funding for all schools can rise at least in line with inflation next year. I also take this opportunity to thank my predecessor, the right honourable Member for East Hampshire, for all the groundwork he did ahead of the settlement.
The funding announcement includes a cash increase compared to 2019-20 of £2.6 billion to core schools funding next year, with increases of £4.8 billion and £7.1 billion in 2021-22 and 2022-23. This is in addition to the £1.5 billion per year that we will continue to provide to fund additional pension costs for teachers over the next three years. This additional investment delivers on the Prime Minister’s pledge to ensure that every secondary school will be allocated at least £5,000 per pupil next year, and every primary school will be allocated at least £3,750, putting primary schools on the path to receiving at least £4,000 per pupil in the following year.
We are allocating funding so that every school’s per pupil funding can rise at least in line with inflation, and to accelerate gains for areas of the country which have been historically underfunded, with most areas seeing significant gains above inflation. We will ensure that all schools are allocated their gains under the formula in full next year, by removing the cap on gains  that underfunded schools have seen over the past two years. This underpins our historic reforms to the overall schools funding system, so that a child with the same needs benefits from the same funding, wherever they live in the country.
I can confirm our intention to move to a hard national funding formula, where schools’ budgets are set on the basis of a single, national formula, as soon as possible. We recognise that this will represent a significant change and we will work closely with local authorities, schools and others to make this transition as smooth as possible.
We are determined that no pupil will be held back from reaching their potential, and this additional investment includes over £700 million to support children with special educational needs and disabilities so that they can access the education that is right for them and the education that they need. This is an increase of 11% on the funding available this year.
Since 2010, education standards in this country have been transformed, but we are determined to go further still. On top of this funding investment, we have announced a package of measures that will intensify our efforts to support all schools in delivering consistently high standards for every single pupil in this country.
We will begin a consultation to lift the inspection exemption for outstanding schools, so that parents have up-to-date information and reassurance about the education in their child’s school. We will also provide additional funding to allow strong academy trusts to expand, building on the success of the academy programme as a powerful vehicle to deliver excellence and school improvement in every school in this country.
We will increase the level of support available to some of the most challenging schools that have required improvement—those that have not been judged good by Ofsted in over a decade—giving them more support from experienced school leaders so they can deliver for the children who turn to them and expect the very best in their education. To ensure the extra funding for schools delivers better outcomes and efficiency, we will continue to expand the school resource management programme, supporting schools to make every pound count. We will also work closely with Ofsted and others to make sure parents have the information they need on how schools utilise their funding.
There are no great schools without great teachers and this settlement underlines our determination to recognise teaching as the high-value, prestigious profession it is. The £14 billion investment announced last week will ensure that pay can be increased for all teachers. Subject to the School Teachers’ Review Body process, the investment will make it possible to increase teachers starting salaries by up to £6,000, with the aim of reaching a £30,000 starting salary by 2022-23. This would make starting salaries for teachers among the most competitive in the graduate labour market. This sits alongside reforms to ensure our teachers have the highest-quality training, supporting those already in the profession but also attracting even more brilliant graduates to the classroom to make a difference to children’s lives. And we will make sure teaching continues   to be attractive throughout a teacher’s career, launching a group of ambassador schools to champion flexible working and share good practice.
A key element in supporting our teachers and leaders is ensuring that they have the tools and support to create safe and disciplined school environments. That is why we have made £10 million available to establish national behaviour hubs. The hubs programme will be led by Tom Bennett and will enable schools that have already achieved an excellent behaviour culture to work with other schools that have struggled in the past to drive improvement. In addition to this investment, we will consult on revised behaviour and exclusions guidance to provide clarity and consistency to head teachers on the action they can take when pupils do not follow the rules. It is vitally important that we ensure that every child succeeds in their school environment and make sure schools are a safe place for pupils to study.
We will also be investing an extra £400 million in 16 to 19 education. This total includes £190 million to raise the base rate of funding from £4,000 at present to £4,188 next year. The additional investment is a 7% increase in overall 16 to 19 funding. The total also includes £120 million for colleges and school sixth forms so that they can deliver crucial subjects such as engineering, which are so vital to our future economy.
Colleges and further education providers will receive an extra £25 million to deliver T-levels and an extra £10 million through the advanced maths premium. A new £20 million investment will also help the sector to continue to recruit and retain brilliant teachers and leaders, and provide more support to ensure high-quality teaching of T-Levels. There will be £35 million more for targeted interventions to support students on level 3 courses—A-level equivalent—who failed their GCSE maths and English. Together, this package will ensure that we are building the skills that our country needs to thrive in the future.
I am sure that many in the House will be eager to know what this announcement means for their constituency, their local area and their constituents. When the information is ready, I will be writing to Members with further details on the impact on schools in their local areas. Now more than ever is the time to invest in the next generation. That is what this party and this Government are doing, making sure that our children get the very best. I commend the Statement to the House”.

Lord Watson of Invergowrie: My Lords, I thank the Minister for repeating the Secretary of State’s Statement, but we feel that the announcement should come with a note of apology, because the Government have for so long denied our regular and consistent claims that there is a funding crisis in our schools. Now, all of a sudden, it seems that there is.
Nevertheless, the funding announced is welcome and a clear recognition of the campaigning not just of Labour in both Houses but of the education unions—the NEU, the NAHT and the ASCL—together with parents, councillors and many others. But unfortunately, today’s announcements do not live up to their billing, because  even the sums announced are not enough to reverse all the cuts already made that have so damaged children’s education. As teachers and pupils start the new term this week, too many will do so in schools facing an immediate financial crisis. Can the Minister say why there is no immediate support? Even next year’s funding is £1 billion short of reversing just the cuts to school budgets since 2010. Will this additional funding be allocated on the basis of the new funding formula announced last year?
In case the Minister is thinking that only the usual suspects are questioning the funding announcement, he might have seen that last weekend’s Sunday Times—hardly noted for criticising the Government—reported that the so-called “cash boost” will overwhelmingly benefit those in Tory constituencies. That paper’s analysis of how regions will benefit from the new minimum funding thresholds revealed that more than 90% of schools receiving more than an additional £100 per pupil are in Conservative seats in areas such as Essex, Kent and the south-west. Of the 153 constituencies set to receive the increase, 143 are Tory held. Can the Minister say whether that is simply a coincidence?
The Statement said that the Secretary of State would announce the affected individual constituencies. It seems that he could get some useful information from the Sunday Times, because it has delivered quite a bit of that already. So is it a coincidence or, as many others suspect or perhaps know, just an election bribe? Many of the schools most in need and struggling with their budgets are in the north of England and London. They are largely not to receive any help. What does the Minister have to say about that? He might be aware that the Education Policy Institute found that a pupil eligible for free school meals would receive less than half the funding of their more affluent peers. How can that be fair?
Can the Minister reassure noble Lords that support staff will not pay the price for the boost to teachers’ salaries? A leaked document from the Prime Minister’s office recently revealed that they were concerned about the rising number of teaching assistants. Many people feel that there should be more teaching assistants, given the extremely important support they provide, and we join with parents, teachers, heads and those who care for children with special needs and disabilities in valuing them. Perhaps the Minister can say what the effect on them would be of this announcement.
On school standards, we know that Ofsted is to lift the exemption on outstanding schools being inspected. I welcome that. The school that my son attends has an outstanding report attached to it, but it was dated three years before he was born. That outstanding schools should not have that protection—I use the word advisedly—is to be welcomed, but none the less, what additional resources will be provided to Ofsted? Its staffing levels show that it is already under strain. If this is to be meaningful, there will have to be additional resources there.
It seems that the Government have finally admitted that there is a crisis in further education, but we know that the Education Secretary returned from the Treasury with about half of what he thought was needed for  that sector. What plans are there to address the long-overdue increase in pay for further education staff? Without it they will continue to fall further behind teachers in schools.
Finally, I will say a word about early years. I understand that it is not officially part of this announcement, but the hourly rate for providers has not increased since 2017. How can issues in schools such as mental health concerns, closing the disadvantage gap and social mobility issues be addressed without paying attention to the support required in early years? Surely it is about prevention rather than cure. Might this issue be addressed tomorrow by the Chancellor, or have the youngest children been forgotten again? I certainly hope not.
The Statement contains far more questions than answers. Whenever the general election comes, Labour will offer a comprehensive funding package for our schools, allowing head teachers, teachers and teaching assistants to provide the high-quality education our young people deserve. I regret to say that this Statement will not achieve that.

Lord Addington: My Lords, I thank the Minister for repeating the Statement. It is interesting and we have to say thank you for the increase in funding—but we needed it. As I understand it, we will get the full impact in about three years’ time. We will not get all of it quickly enough.
The main delivery system for education is the staff. Teaching staff will receive a pay rise, but there seems to be a question about whether academies will be able to filch off and take away the best staff with better offers to make sure that they are not available to schools that need them. Can the noble Lord give us some idea of what the thinking is there?
In the same tone, why are those in further education teaching not being treated in the same way and given the same degree of support? Delivery, and the person who delivers, is the key point here. If you get that wrong, everything struggles. Making sure that we have systems in place to ensure that people are properly paid across the sector is vital. We need more thinking about this. The cash is welcome, but unless these things are properly delivered, problems will be compounded.
There is also the issue of equalisation of funding. We have already mentioned that schools who have been receiving this seem to be those with fewer, shall we say, home problems, or potential home problems, in terms of free school meals. We all know that backing a parent sufficiently makes a huge difference to schools. An idea about the thinking there would be very beneficial. Why is it that those who have that background support are able to get support outside and within the system more easily? Why is that seen to be the way forward?
I now go to my specialist subject and remind the House of my interests in special educational needs and technical support. I thank the Minister for the money for special educational needs; it is roughly a third of what we need to go back to 2015 levels. When are we going to make sure that local government and the education authorities have enough money to meet their needs? I have raised with the Minister on numerous occasions the fact that tens of millions of pounds is wasted by local authorities in losing appeals not to  fulfil education and healthcare plans. When will this no longer be the case? This is a ridiculous situation. We have, I hope, the start of a cohesive plan here. It can be restructured if you like, to put in more specialist teachers who can deal with these problems in the classroom and the school. That is an infinitely better situation than leaving it to bureaucracy—but when are we going to start dealing with it?
In the same tone, why are we so obsessed with making sure that people must continually take English and maths tests they failed when they were in further education? The amount of undiscovered special educational needs is recognised by everybody, possibly because the staff are not well enough trained to recognise it and give the correct amount of support. Some people just will not pass. Why are we wasting time there and not finding other ways of getting around this? The technology for English translation is there and it is also there to help with things such as maths. Surely this is a better and more coherent way forward. I look forward to hearing the Minister’s reply.

Lord Agnew of Oulton: I thank the noble Lords for their questions; I will try to address all of them.
The noble Lord, Lord Watson, is worried about the fact that the funding seems to be benefiting Conservative seats. The only reason it will benefit those is that historically they have been underfunded compared to other seats: small rural schools have not received the same level of funding as urban schools. With the national funding formula, we have introduced a hard bottom, so that even the best funded schools will increase their funding, but we will increase those who are below the NFF at a rate that is considerably quicker. I assure the noble Lord that there is no gerrymandering; it is just a quirk of history that has ensured that these schools have not done nearly so well.
The noble Lord also asked about teaching assistants. I am concerned about teaching assistants because I believe that we are missing an opportunity to provide fantastic career progression for many of them. Amazingly, some 30% of teaching assistants have degrees, and therefore could go on to teaching relatively easily if they wanted to but are often held back by their wish to look after their children. Many TAs are the parents—mostly mothers—of young children, and therefore teaching hours are not always conducive. That is why the Statement says that we are going to try to make more progress with having more flexible working in the teaching profession. We strongly believe that if we could have more flexible working in teaching, job sharing and so on, many more TAs would go on into teaching, which would be a great boon to them. It would increase their pay—

Lord Watson of Invergowrie: I thank the Minister for giving way. It is not so much about those progressing from being teaching assistants to being teachers, but that schools under such financial pressure have in many cases had to dispense with the services of teaching assistants. That is an important issue and many people will be looking to this announcement for reassurance.
I had not noticed when I was speaking earlier that the Secretary of State and the Minister for Schools are here. That is laudable, and I commend them .

Lord Agnew of Oulton: On the noble Lord’s concern about teaching assistants, even through a period of what he would consider to be austerity, the number of teaching assistants has risen by some 49,000 since 2010. In 1997, there were 70,000 teaching assistants, and today there are around 250,000, so I do not believe that the system is in any way denuded of them. The next phase is to encourage those who want to enhance their careers and move to a higher paid profession.
In relation to the noble Lord’s question on Ofsted inspections of outstanding schools and resources, we are already in detailed discussions with it about funding the cost of these additional inspections. I reassure the noble Lord that we are not going to ask it to do it without some support.
On FE funding, this is a tremendous settlement, certainly the biggest since 2010, and, officials have indicated to me, it might be the biggest since 2004. It increases the base rate by 4.7%.
The noble Lord, Lord Addington, made a point which I did not fully understand, when he said that academies would filch the best teachers through this process. Academies are schools; they now account for over half of all pupils in the state system. Therefore, they will benefit from these announcements, but so will local authority schools.
Again, in terms of FE staff—

Lord Addington: I thank the Minister for giving way. My point is that academies are not under the same restrictions on maximum levels of pay.

Lord Agnew of Oulton: The noble Lord is correct that they are not under the same restrictions, but there are very few examples of academies paying more. I have come across one or two innovative ideas. For example, one trust in Kent pays its newly qualified teachers £2,000 more a year, but that ends up saving it money because it has less attrition and keeps its teachers for longer. As the Statement said, we will be increasing starting salaries for all teachers to £30,000, which is a dramatic increase, some £6,000 above where it is at the moment.
The noble Lord also asked about free school meals. He felt that those schools with higher numbers of children receiving free school meals were benefiting less. It is worth reminding the noble Lord that we introduced the pupil premium back in 2011, and each year that has been a sum of some £2 billion going to support the schools with children from disadvantaged backgrounds. More importantly, it is encouraging schools to recruit these sorts of children, because they get a strong financial benefit. It works out at nearly £1,000 a pupil for a secondary school.
Lastly, the noble Lord raised his particular passion around SEN. I accept that the noble Lord has raised the level of funding many times. We dramatically increased it in 2013. It was £5 billion a year, and with this new funding it will go up to £7 billion a year. We have also announced that we will carry out an inquiry into how the whole SEN healthcare plan system is working. I take on board the noble Lord’s concerns about the cost of appeals which local authorities are  losing, but any system must have a hard edge. As we have discussed, the percentage of cases going to appeal is minuscule in relation to the overall number of cases being given these education healthcare plans.
I did not expect the noble Lords opposite me would be ululating with pleasure at this settlement, but it is a dramatic improvement. I have spent two years defending the system, but this is a Statement that I absolutely wanted to deliver tonight, and I am delighted that I was able to do so.

Baroness Garden of Frognal: My Lords, I thank the Minister for repeating the Statement. As he said, we are all delighted that more money is going into education, but like the noble Lord, Lord Watson, and my noble friend Lord Addington, I have reservations. Mine focus on the part of the Statement relating to colleges. As we know, our FE colleges are underfunded and unloved and have been for far too long, yet they often not only provide outstanding education but are a community resource and provide community cohesion. I want to ask the Minister about two matters. First, the Statement says:
“Colleges and further education providers will receive an extra £25 million to deliver T-levels”.
T-levels are totally untried and untested, whereas there are a raft of well-established and well-understood vocational qualifications—I declare an interest as a vice-president of City & Guilds—which could continue to do great things if they had better funding behind them. Why is this funding going only to T-levels, which are not yet tried and tested and about which we know very little, and not to all the work-based qualifications which provide the skills that the country desperately needs?
My second question repeats that of my noble friend Lord Addington, which I do not think the Minister replied to. It relates to the pernicious practice of trying to get youngsters repeatedly to resit GCSE English and maths, only for them to fail again and again. All one does is reinforce failure and leave people demoralised and thoroughly fed up about education. Nobody argues with the idea that young people need literacy and maths skills, but GCSE is not the right vehicle for that. Colleges spend an awful lot of time and resource trying to put youngsters through those wretched exams and watching them fail again and again. When will the Government rethink and bring in some functional literacy and maths tests which would be far more appropriate for the youngsters who have to resit?

Lord Agnew of Oulton: The noble Baroness raises important points. It may be worth summarising some of the specific funding coming into the FE sector, because I know that she is a passionate supporter of it, as am I. I am very pleased that, under my new Secretary of State, I will have greater involvement in the FE sector and look forward to discussing some of these issues personally with the noble Baroness.
We will invest an extra £400 million in colleges and school sixth forms; there is a 7% uplift of 16 to 19 funding, not including the increase in funding for pensions. The total includes protection of and an  increase in the 16 to 19 base of £190 million, with £120 million for colleges and school sixth forms so that they can deliver on subjects which require perhaps more expensive teachers, such as engineering and so on. I hear the noble Baroness’s concerns about T-levels, but we are also adding another £10 million for the advanced maths premium. There will be an additional £20 million to help the sector continue to recruit and retain teachers, and there will be £35 million more for targeted interventions to support the area that the noble Baroness is concerned about; that is, resits. Some of that money will be used to look at different ways of trying to help children who perhaps do not learn in a traditional way. In 2019, more than 46,000 pupils successfully resat their English GCSEs, as did 35,500 maths pupils, to obtain a standard pass. All those children whose careers were blocked by not having maths and English have cleared that hurdle this year. I am one of seven children in my family; only two of us got maths O-level, so I know exactly the frustration faced by children who struggle with these subjects, but we are on the right course and I hope to use some of this additional money to see whether we can find better ways to reach them.

Lord Lexden: My Lords, this is a most significant Statement and I congratulate my noble friend and all his colleagues on it. It surely represents a central element in the ambitious Tory programme of reform that is emerging under this Government, a programme that must not be overshadowed by Brexit.
Can my noble friend give the House a little further information on two of the initiatives announced in the Statement? First, how many ambassador schools are there to be? Where are they to be established and how will they operate? Secondly, how many national behaviour hubs will there be, where will they be established and how they will operate? One is bound to express here a great hope that that these initiatives will answer the deep sense of yearning in our country for good standards of behaviour in all our schools. Finally, what progress is being made towards the final establishment of the national funding formula, which we have discussed on a number of occasions in this House?

Lord Agnew of Oulton: My noble friend asks important questions, too. The ambassador schools are a new initiative which we are working on at the moment, so I will be happy to write to him when we have developed the information a little more. There is a school—I believe it is in Tunbridge Wells—where 38 of its 100 teaching staff are part time, yet it achieves outstanding educational results. This is a process of education for the teaching profession to show that job sharing and part-time teaching are viable in a school setting. We will develop that, and I will write to my noble friend as we push that forward.
Likewise, the national behaviour hubs have rolled out very recently. The extra money will enhance the number of hubs. My noble friend is not here, but, if he were, I could give a number and he could nod at me, but I think that we are starting with around eight hubs. I might be wrong and will write if that is so, but the idea is to take best practice from those schools that are good at it to show those which are struggling. That is how we plan to roll it out.
On the NFF, as the noble Lord, Lord Watson, pointed out, the funding that we are proposing will be fed in over the next three years, but the idea is that, by 2022-23, all schools will be on or above that funding. For those that are well below it, particularly primaries, we are not pushing up the amount straightaway from £3,500 to £4,000 per pupil, because we want them to have time to absorb the extra resource, so the allocation will go up by £250 next year and reach £4,000 the following year.

Bishop of Durham: I thank the Minister for repeating the Statement. Much of it is extremely welcome. We know that rural schools in particular have been under enormous pressure, so the fact that the new formula should assist them is really to be welcomed. However, is the Minister confident that it will offer the real protection that some of those schools need? They are at the heart of their communities, and the loss of them will have a massive impact on those small rural communities. I would like a reassurance on that. I remain slightly unconvinced that schools in the poorest areas will not lose out. I accept that pupil premium is clearly there, but I remain concerned that the evidence that the Sunday Times has produced so far means that the poorest may suffer.
The noble Lord, Lord Watson, asked a question about early years; we know that the earliest years matter most. I hope the Minister will forgive me if I missed something in his earlier response about what further commitment to sustaining early years education might be.
If I may add my voice to that of the noble Baroness, Lady Garden, I think that further work needs to be done on alternative ways for literacy and maths, not just keeping on pushing GCSEs. Yes, it is great that some further students passed, and the Minister gave us the numbers, but that alone will not solve the issue. We must find some alternatives.

Lord Agnew of Oulton: I am perhaps more optimistic on rural schools than the right reverend Prelate. Coming from a rural background myself, I know the importance of these schools in communities beyond the simple provision of education. As he quite rightly said, some of the greatest increases in funding will go to these schools over the next two to three years. I am therefore very confident that it will be a huge boost to them.
Early years was not the subject of this announcement. It may be addressed as part of the spending review tomorrow, but it is not in the remit of this announcement.
I hear the right reverend Prelate’s concern on these retakes, but I am afraid I respectfully disagree with him; I think it is incredibly important that they get these base qualifications so that they can progress to their career, but I accept that we need to find better ways of educating. I am particularly interested in edtech, which might bring in ways of teaching that have previously eluded those pupils.

Lord Storey: My Lords, I also welcome the Statement. We are obviously delighted that extra resources are being made available, and I accept the figures that were given. I am concerned about two areas. The first  is further education—we heard my noble friend Lady Garden speak eloquently on this subject. While there are extra resources, does the Minister expect that they will increase over the next few years? I have never quite understood—perhaps the Minister could explain this to me—why, if I am a chemistry teacher in an academy or a maintained secondary school, I get considerably more pay than if I am a chemistry teacher in a further education college. Why should this be the case? Secondly, if I am in a sixth form college which is part of an academy chain, there is a VAT exemption. If I am in a stand-alone sixth form college which is not part of an academy chain, the school has to pay VAT. Can that be fair?
My niche question is on behaviour. I was fascinated, interested and delighted to hear about these behaviour hubs and will watch this space with interest. We heard the Secretary of State say, whether it was in the Statement or separately, that he would back schools which permanently excluded pupils from school for bad behaviour. I have always said that teachers have a right to teach and pupils have a right to learn. Schools have to do everything possible to try to ensure that pupils with behavioural problems are supported within the school, but if we move to a system where there is a sort of free rein to exclude pupils, we will see all sorts of difficulties. If we move to that new ethos, will the Minister make available more resources for alternative education? If that is the case, will he ensure that the use of unregistered alternative providers no longer happens? We are seeing young people excluded from school and going into unregistered providers, many of which quite frankly do not deserve to be in education at all. The young people are not even checked in and checked out; they can often roam the streets and get involved in drug and gang culture. That cannot be the case, so what extra resources will there be for alternative education in this announcement?

Lord Agnew of Oulton: The noble Lord asks important questions. First, I will try to clarify the difference between FE and the school system, particularly the academy system. FE colleges have a different legal status and a degree of independence which does not relate to the school system. The colleges themselves take the decisions on pay, and one of the anomalies which I must admit I do not really understand is that they tend to prefer to pay all teachers exactly the same rate irrespective of their skills or the particular subjects they are teaching. One of the things that I want to do with this new funding is to find a way of challenging them to be a bit more flexible. As the noble Lord says, if you teach chemistry in an academy and earn X amount, why can you not earn a similar amount in an FE college? I want to get to the bottom of that, to be honest.
Again, VAT status is a quirk of the different legal status of these entities. For example, FE colleges as independent units have the right to borrow, which does not exist in the school system; however, as almost a quid pro quo, they do not have the right to recover VAT. We have offered for sixth form colleges to convert to academisation; quite a lot of them—over half, I think—have done so. Those that have not have reasons for choosing not to, but it is an option that they can consider.
On behaviour, I have just found a note. To answer my noble friend Lord Lexden’s earlier question, the first hubs will open in September next year. In relation to exclusions, I assure the noble Lord and everyone here that we are not for a second suggesting a free-for-all on permanent exclusions. Indeed, in the new Ofsted framework, there will be much more scrutiny of exclusion policies, particularly permanent ones, by schools. So there is no suggestion that we encourage exclusion, but I believe strongly that it is an important tool in the locker of a school where very difficult children disrupt the education of others.
To be clear, an unregistered school is an illegal school. Ofsted has an ongoing programme to track these schools down; when they are located, we close them and take legal action against the proprietors where that is the appropriate course.

Lord Storey: I am pleased with the Minister’s answer. In terms of alternative provision, the problem with unregistered schools is that local authorities themselves send the excluded pupils to those institutions. The parents are not deciding that they should go to a particular religious type of unregistered school; local authorities are saying, “Oh, we’ve got this boy or girl, this student, who has been excluded from school.  We are going to put them in alternative provision”. They then go for the cheapest option, which is often an unregistered school, with all the problems that that entails. I have asked before whether we can write to local authorities saying that this is not acceptable because they are operating illegally.

Lord Agnew of Oulton: The noble Lord is quite right. Sometimes, a local authority may use part-time provision that may be legal but, often, these morph into full-time institutions without the local authority realising. We are in constant dialogue with local authorities on this issue, reminding them that sending a child to an unregistered school on a full-time basis is not on. We are carrying out a consultation of the process of getting schools to take ownership of a pupil once they have excluded them; in other words—this is not agreed yet, but we are consulting on these ideas at the moment—they would be responsible for the ultimate educational results of the child that they had excluded, so they would have to consider the issue much more carefully. We are opening more free school PRUs and APs so that more provision is available. I accept that this is a difficult area, but we are putting a lot of emphasis on it.
House adjourned at 8.16 pm.